A carbon tax is a tax on energy sources which emit carbon dioxide. It is a pollution tax, which some economists favour because they tax a ‘bad’ rather than a ‘good’ (such as income). Carbon taxes address a negative externality. Externalities arise when an individual production or consumption activity imposes costs or benefits on others. In market transactions, these costs and benefits are not normally reflected in the prices involved in the transaction, or taken into account in the transaction decision.

By placing a cost on these negative externalities the underlying purpose of a carbon tax is to reduce emissions of carbon dioxide and thereby slow global warming. It can be implemented by taxing the burning of fossil fuels—coal, petroleum products such as petrol and aviation fuel, and natural gas—in proportion to their carbon content.

There is some political support for a carbon tax in Australia as a means of implementing a carbon price. Some groups favour this approach as an interim step on the way to an Australian emissions trading scheme.

Garnaut has elaborated and updated his report in line with the latest science and lack of effective action nationally and globally. But the bottom line, in my opinion, remains the same. We need to scrap the renewable energy target (RET), Renewable Energy Certificates (RECs) and feed-in tariffs (FiTs), set a low initial carbon tax at about $10/t, establish an equivalent of the Board of the Reserve Bank to manage the tax and set future prices, and have some legislated schedules (gateways) such as a floor price of $20/t by 2015, $30/t by 2020, and so on. The rising price – with short-term decisions taken out of Government hands to avoid distortions arising from political expediency – is absolutely key. Finally, and in line with eliminating the RET and FiTs, we need to really level the energy playing field and allow nuclear to compete with renewables and fossil fuels with carbon-capture and storage (CCS).

Australia is proposing an initial carbon tax, followed some years later by a cap-and-trade system. What is the difference? Here is a brief summary (my perspective, with bad points in red and good points in green):

Here are some further details about the history of the discussion here in Australia:

Australia has considered both cap-and-trade schemes and a carbon tax. In 2007, the Productivity Commission suggested that a carbon tax should be implemented.[0]

On 30 April 2007, the state Labor Governments commissioned the Garnaut Climate Change Review, whose sponsorship was joined by the Rudd Government soon after taking office in December 2007. The resulting report, delivered on 30 September 2008, recommended an Emissions trading cap-and-trade system. Subsequently the Rudd Government proposed a Carbon Pollution Reduction Scheme, which after much criticism, was voted down in the Australian Senate by both the Australian Greens (for being too ineffective), and the conservative Coalition (Australia) (for the effect on key economic sectors), as well as independent Senators Nick Xenophon [1] and climate change sceptic Steve Fielding.

In February 2010, the Australian Greens proposed an interim carbon tax of $A23 a tonne for two years.[2] In April 2010, academics from the Australian National University published a proposal for a carbon tax on major polluters (such as coal-fired power stations and oil companies) that would provide increased funding for Australian public hospitals and other health costs associated with climate change.[3]

On February 24, 2011, Australian Federal government announced a framework to implement a Carbon Tax from July 1, 2012. It is set to be implemented over 3–5 year period upon which it will switch to a cap and trade system. The price has not been set but various proposals have been discussed in the recent past, such as $23/t and $26/t. The announcement came after an agreement between the Federal Labor government, the Greens and two Independent MPs and included commitments to ensure all funds collected go back to homes and businesses to assist in the transition to renewables.[4] This led to accusations that Prime Minister Julia Gillard had breached a pre-election promise not to introduce such a tax where she stated to Network TEN: “There will be no carbon tax under the Government I lead”. The Leader of the Opposition, Tony Abbott, has called for an election over the issue.[5]

On June 5, 2011, the Say Yes demonstrations were held in which 45,000 people demonstrated in every major city nation-wide in support of a price on carbon pollution.[6] Many demonstrations have also been held around the country and in regional towns against the proposed Carbon Tax, albeit to a lesser extent.

For more discussion and critiquing on BNC on the topic of emissions cap-and-trade, carbon taxes and other proposals like fee-and-dividend, please consult the following posts:

My own position is that broadly I’m in favour of a Cap & Trade system. The Carbon tax gets a hearty “meh” from me, not because I’m against it as such, but because I have no confidence in the ability of the Gillard government to administer it.

Of course, I don’t have much confidence in Abbot & co either.

And don’t get me started on the Greens . . .

So . . any chance of the Australian Shooters’ Party getting office? :D

Even though it keeps being called a carbon tax, it is in fact going to be an Emissions Trading Scheme, but the price per tonne of CO2 is going to be fixed (at somewhere between $20 and $25 per tonne; the precise figure will be announced on Sunday) for the first three years. I agree this is effectively a carbon tax, but it isn’t actually a carbon tax. Note that fixing the price for three years is different to the amended ETS that was negotiated in late 2009 between Rudd and Turnbull. In that scheme, there was only going to be a fixed price of $20 per tonne for the first year, and then a floating price after that.

Also, according to today’s Australian, it seems that the Greens have negotiated a floor price after the initial three year period, while the Government has won in the negotiations for a ceiling price. So even after the first three year period, it still won’t be a pure market price.

Another difference between this scheme and the amended CPRS is that it seems the Greens have managed to get the Government to knock off $275 million worth of compensation to the coal industry, again, that’s according to today’s Australian.

While I’m sure people will be able to pick at the new scheme, let’s all remember that this is a negotiated outcome between Labor, the Greens, and the two rural independents – Rob Oakeshott and Tony Windsor – as part of the Multi-Party Climate Committee. At the start of the current parliament, the Prime Minister wrote to both Tony Abbott and Nationals leader Warren Truss inviting them to nominate members to the multi-party committee, so that both of the Coalition parties could contribute to the final outcome. Tony Abbott refused to allow any of his MPs to join the committee, even though we know almost half of the Liberals supported passing the original amended ETS when Turnbull was the leader.

Therefore, I give the government a lot of credit for coming to a negotiated solution to this problem even in the face of total opposition by Tony Abbott (who in the past has at different times supported both a carbon tax and an ETS, including in 2007 when he was a Cabinet Minister in the Howard government)

If anyone believes that Abbott’s tax and spend scheme will work out to be cheaper – keeping in mind that both parties are aiming to cut emissions by 5% of 2000 levels by 2020 – then they must also believe that politicians are better at efficiently allocating resources – i.e. spending money – than markets.

To Peter Lang in particular:
1) Human induced climate change caused by carbon dioxide and companion greenhouse gases and the associated water vapour feedback is proven.
2) Don’t let the perect become the enemy of the possible.
3) The conservative Australian populace needs to experience for itself that this carbon emissions tarriff (some call it a tax) will cause no harm. It will have far less impact than the carbon taxes we already pay such as the petrol taxes. These raise more revenue than will likely be raised from the carbon tarriff.

The Australian people need to become comfortable with the new price placed on carbon. They need to learn for themselves that the world as they know it won’t fall around them. In this new paradigm, as climate change continues to bite they will hopefully demand ever greater restrictions on carbon emmissions.

@ Barry — I can’t believe some think there is a conspiracy of silence about Carbon Pricing when you’ve already had 7 whole posts dedicated to pricing Carbon? That’s amazing — I had no idea you had that many threads on a rather dull administrative subject?

Whatever the thoughts about how Carbon might be priced, I hope we’re all agreed that a Carbon Price without baseload nuclear power is only going to waste money on renewables and not really do anything to stop Australia’s contribution to climate change.

I could hardly believe my ears when I heard this comment from Julia Gillard on the ABC news tonight:

“I am absolutely confident the coal industry has got a fantastic future in this nation – a future of growing jobs with $70 billion of investment in the coming pipeline.”

Silly me – I thought the idea of a carbon tax was to gradually lead to a shutdown of coal production and use. What the hell is it for then?
Here is the transcript of the news item in which she made that ridiculous statement.http://www.abc.net.au/news/stories/2011/07/06/3262698.htm
Makes you want to pull the blankets over your head and give up on any hope for the future for our kids and grandkids. Depressing!

Barry, I am surprised that you think we have time to increase rates from $10/t to $30/t by 2020 etc. Katherine Wells has questioned the strategy of aiming to limit global warming to 2 degrees by 2050 (https://bravenewclimate.files.wordpress.com/2009/08/recent_climate_change_science_kw.pdf). With an impending global climate change emergency such targets seems inadequate. What is the reasoning behind your seemingly calm approach? Shouldn’t we have more significant aims?

@ Ms Perps
Julia’s underplaying the danger to coal and being saccharine sweet and *irrational* while Tony Abbott is over-playing the danger to coal and being hysterical and *irrational*. What hope indeed?
(The comment to which you are replying has been deleted as off-topic and asked for a re-post in the Sceptics thread.)

You asked “What effect would such a carbon price have on the economy?”

I presume that by this you are asking about the effect on the economy in the short term? I would ask how this would compare with the effect on the global economy in the long term of global warming in the long term, if there is an increase of 2-4 degrees? I am not sure if either of these questions can be answered.

I am also not convinced that your four questions are the best to ask. Off the top of my head, here are some different questions that I would like to ask:

1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
2. What are the best approaches to reducing the effects of AGW?
3. How do we best inform or educate the global community of these risks and involve them in developing and implementing the most effective solutions?
4. What has to change in global governance in order to make an appropriate response to the risk of AGW possible?

Karl-Friedrich Lenz “What will happen with the income from that new carbon tax in Australia?”

The Federal government will auction off permits that businesses that release over a certain amount of pollution will need to cover their pollution liabilities. If they reduce their pollution they can sell the excess permits that they own.

The money the government raises from auctioning permits will be split about 50/50. Half will go to compensating households for price increases, the other half will be spent to compensate emissions intensive industries and invest in clean energy tech. Over time the business compensation will be withdrawn as other countries adopt similar carbon pricing.

Eclipse Now “Whatever the thoughts about how Carbon might be priced, I hope we’re all agreed that a Carbon Price without baseload nuclear power is only going to waste money ”

While I support Australia using nuclear power, a carbon price will still achieve some benefits, such as shutting down the dirtiest coal plants, and encouraging people to use less electricity.

Ms Perps “Silly me – I thought the idea of a carbon tax was to gradually lead to a shutdown of coal production and use.”

Shouldn’t we try and get the most energy possible out of the coal that we do burn? If the carbon price encourages the shut down of Hazelwood, Loy Yang and Playford, and ends up replacing them with a mix of gas and renewables, then it would’ve achieved its goal.

Of course, this is a defeatist argument. “we only emit 1% of global CO2 emissions so nothing we do matters”. Oh yes very constructive attitude. A billion Chinese have no problem copying this attitude – and boy are the Chinese good at copying things.

While it is not for me to tell Australia what to do, I am in a unique position to inform people down under of the situation in Europe, particularly from a perspective they may not have been exposed to so far from their normal sources of information. For more than two decades I help design and achieve regulatory approval for the Irish industrial sector, such as pharmaceuticals, power plants, etc. Since 2000, I worked extensively in Central and Eastern Europe on EU technical consultancy projects implementing industrial pollution control, control of major accident hazards and energy projects in the new and accession States. This has given me a rather unique insight from both a technical and legal perspective.

While people may have strong opinions on a particular environmental subject, proper application of EU environmental legislation is based on factual considerations and adherence to set procedures. One of the overriding principles is the Principle of Proportionality, in which the financial or other burden placed on the citizen must be minimised and commensurate with the objective to be achieved. The other principle is the ‘Polluter Pays Principle’. External costs arise from the impact of economic activities, such as emissions from a vehicle exhaust, which then can lead to health impacts (costs) in the surrounding population. The goal of the legislation is that these costs become internalised, i.e. paid for in the financial cost to use the economic activity and are therefore over time minimised.

Governments have of course to raise taxes. However, the manner in which this is done should not lead to distortions and all too often wasteful outcomes. Any form of carbon tax or incentive for low carbon energies has to reflect the true cost of carbon and not a political decision. So what is the damage cost of carbon? After all we have other worthy environmental causes, such as the 380,000 premature deaths that occur each year in the EU from air pollution, overwhelmingly from fine particulates. Unfortunately the carbon damage cost has never been calculated, the EU had a major research project, ExternE, which calculated the external costs of power generation, traffic, etc; http://www.externe.info/ . However, as can be seen from Chapter 8 of the 2005 Methodology Update, there was a complete failure to properly assess a damage cost for global warming.

So instead we have a programme based on nothing but political ambitions, which is not based on any proper quantification of impacts, and has lead to massive distortions in the economy. As the Russian Proverb states: “When one puts out a trough, the pigs will come to feed”. Is the public, which is financing this trough getting value, could the money be spent in a better manner elsewhere? Answers please would be appreciated, because such programmes require by EU law proper environmental assessment. The environmental objectives have to be specified; for instance how many tonnes of carbon are to be saved, what is the resulting environmental benefit (need a damage cost of carbon to do that calculation). What are the alternatives to meet those environmental objectives? What is the state of the environment without implementation of the plan?

However, none of this was ever done; it all got completely out of hand. An example would be Denmark, as part of the EU’s plan for 20% renewables by 2020 it is going to increase the percentage of renewable energy in its final energy consumption from 17% in 2005 to 30% by 2020. They have a National Renewable Energy Action Plan prepared according to the EU template. Section 5.3 on page 113 is very interesting: http://ec.europa.eu/energy/renewables/transparency_platform/doc/national_renewable_energy_action_plan_denmark_en.pdf . It is blank, they don’t know the estimated costs and benefits; no data on financial costs, no data on expected greenhouse gas savings and expected job creations. Pretty much the same for the other Member States as this Section of the plans is optional. However, the targets and massive costs that will have to be carried are mandatory.

Does any of this make sense? This clearly is not proper governance, when are people going to shout STOP. Unfortunately few have the training or expertise to realise what is going on, people do not see the ever increasing and unnecessary rise in energy costs, not only in what they pay, but in the resulting relocation of industry to locations with lower energy costs. The net result they just import those goods instead of manufacturing them, until such a point is reached until they can no longer afford them. Does any of this benefit the environment? There is no a single fact or figure to demonstrate that it does, so one has to believe in the perception that it does and the ability of populism to make correct decisions. However, as Warren Buffet says: “A public opinion poll is no substitute for thought”.

1) key foreign buyers of coal and LNG escape paying the tax that Australians buyers must pay on burning the fuel
2) the wind and solar build will stop dead unless there are additional subsidies.
3) carbon intensive industries need help to change technology, not wads of cash to soothe hurt feelings
4) the nuclear option is disallowed.

On renewables it seems the government will offer some very generous capital subsidies with no word yet on per-Mwh subsidies like renewable energy certificates or German style national feed-in tariffs.

Taxing fossil fuel exports; Australia has the most developed coal shipping system. It may overtake Qatar as the world’s biggest LNG exporter. Therefore if Australia makes foreign reliance on our coal and LNG progressively more difficult those customers are faced with tough choices. It might be easier just to play along with refundable carbon tax rather than source coal and LNG elsewhere. The tax revenue would go back the importing country not the private company. The money helps the foreign government implement lower carbon policies.

Cash handouts must dry up and are a recipe for prolonged blackmail. I think there is no option but to impose a carbon tariff on energy intensive imported goods. For basic steel I suggest that is about $50 a tonne and for aluminium-via-coal about $300. Thus India and China don’t get a free ride on our serious carbon abatement.

Sections of the ARPANS Act should be repealed to allow the possibility of nuclear generation. I see no way that gigawatts of brown coal generation can be replaced by gas from nearby dwindling sources. As the c.t. makes dirty power radically more expensive all options should be on the table.

The Azimuth project’s section on Carbon Pricing says: There are three possible approaches:

– Price the energy on consumed items. So if a car is imported from China the carbon price for the construction of the car will be paid by the purchaser of the car. This might be the fairest method, but it has two big disadvantages: (a) It is probably impossible to say how much carbon went into the production in a foreign land; (b) It is probably in breach of WTO rules. To solve (a) would need something like a carbon-added tax between all participating countries, with non-participants being slugged on a high estimate basis. To solve (b) would need a fair bit of goodwill.

– Price the carbon as it comes out of the ground. Since coal is the main culprit, and there are only a small number of major coal producing countries, this is the option that might actually work. However it would require those countries to decide to forego the profit from digging up their coal.

– The third option is the only one under consideration anywhere. Tax the carbon as it is emitted into the atmosphere. This has no chance to work since it will just move the production elsewhere. In fact not only is Australia planning to move its jobs elsewhere by this method, but it will be happy to ship the coal there as well.

Pat Swords, brilliant comment. There are some things that Governments can do, and that is to set regulations which will push society in directions that will result in less harm to the environment. The British “Clean Air Act of 1956” is a case in point.
This solved the problem of London’s smogs, which killed thousands in 1953. There was no talk of taxes or trading schemes to effect this action.
The Governments need to get proper energy policies based on empirical data, with cost/benefit analysis done on all proposed solutions.
France dropped its reliance on fossil fuels for 70% of its electricity supply in about thirty years- we can do the same given the correct policies.

Can anyone please answer the following? Of the 194 nations participating in the IPCC fewer than half have pledged to implement economic interventions (carbon tax/ETS/cap-and-trade etc.). Why is that? To date only 32 countries have actually implemented such schemes. Why have the others not done so given that it is now 4 years since the IPCC published its 4AR?
Further, due diligence would seem to require that details of the impacts of such interventions on the economies of those countries should have been considered. Has that been done?
In its modelling of the carbon tax, what assumptions have been built-in to the computer models? How realistic are those assumptions?
What propotion of the Australia’s carbon tax has been pledged to the UN and its subordinates? How much has been paid to the UN climate fund? What is the schedule of payments to the UN? Will any of these questions be ansered on Sunday?

1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
2. What are the best approaches to reducing the effects of AGW?
3. How do we best inform or educate the global community of these risks and involve them in developing and implementing the most effective solutions?
4. What has to change in global governance in order to make an appropriate response to the risk of AGW possible

Hi Pat,
thanks for your very interesting post from a European perspective.

So instead we have a programme based on nothing but political ambitions, which is not based on any proper quantification of impacts, and has lead to massive distortions in the economy. As the Russian Proverb states: “When one puts out a trough, the pigs will come to feed”. Is the public, which is financing this trough getting value, could the money be spent in a better manner elsewhere? Answers please would be appreciated, because such programmes require by EU law proper environmental assessment. The environmental objectives have to be specified; for instance how many tonnes of carbon are to be saved, what is the resulting environmental benefit (need a damage cost of carbon to do that calculation). What are the alternatives to meet those environmental objectives? What is the state of the environment without implementation of the plan?

For me it’s about bang for the buck. We need to close down the worst single polluter — coal — for the climate, for our lungs, for the landscape, and for the protection of future sources of carbon for manufacturing steel. (Steel requires about 0.5 billion tons of coking coal per year to catalyse impurities out of the iron ore and make the new steel we need! Old steel can be shoved through an electric arc furnace without as much carbon.)

For me the answer is based on what the technical boffins here have concluded and makes sense of the big energy picture: how many nuclear power plants would it take to shut down all European coal fired power stations? How quickly can you get a factory to manufacture modular GenIV reactors? Say the EU goes with the General Electric S-PRISM reactor. How fast can they build the prototype and then commercialise these GenIV reactors flying off assembly line? Older reactors were hand crafted on site. Each is an individual project like a Rolls Royce, and cost as much in relative terms. These newer reactors will shoot out of the factory like so many Hyundai’s, and the modular parts will be trucked to site and clipped together like so much giant sized Lego.

Without a clear strategy for shutting down coal your ETS will end up funding toys like wind turbines and solar plants that will not result in a single coal fired power plant actually being shut down!

Now, weaning off oil and gas will be trickier as these tend to be different energy markets for different purposes like transportation and heating. But here you can teach us Australian’s a thing or two about public transport, having Dense and Diverse city cores and New Urbanism. You guys lead the way. (Apart from the very home of car culture, Portland America, where there has been a backlash against the car and for a more European city core). My personal conviction from the town planners I read is that the great cities of the world could easily install new zoning laws that would over time make each city “More European than Europe” — at least as far as Density of population and Diversity of function go. Town plans can be dense and attractive and vital and generate economic activity, provide housing for the poor, and have plenty of parks and promenades and public transit when we are catering more for people and less for parking!

Then there are schemes like biochar for agriculture, plasma-burners for recycling all our household municipal rubbish at an atomic level, repairing local ecosystems for ecosystem economic services, reinventing industry around green chemistry and better building materials, and all manner of other low carbon energy efficient processes to guaranteeing a convenient and comfortable and modern lifestyle.

But we’ve simply got to kill coal, and the only way to do that is with nukes.

Dead right Eclipse and John Morgan. Ther’s already a significant nuclear build going on around the world, in 20 countries in fact. 67 new reactors if I read correctly. If we could increase this nuclear build even more rapidly, including in Australia, that could/should enable phase out of coal for power over time, around the world. That will give big reductions in world emissions and help stabilize CO2 content at appopriate levels. Nuclear is the world’s best option for a secure energy supply and without emissions.Everyone should know that. And we need to remember in all of this the billion or more who stil burn cow dung or sticks for heat thereby choking their kids and themselves and the atmosphere in the process. We address that problem by giving our mandated 0.7% GDP [all developed countries ] in aid, in the form of appropriate sized nuclear reactors so that they can turn on a light and cook a meal, if they happen to have any food. food. l

Thank you so much for putting up this thread. Your post was excellent, and I thought you even got the tax implementation schedule about right, i.e. $10/t to start with. $20/t by 2015 and $30/t by 2020.

gyptis444 the Treasury model is of course confidential information. However they conclude that a modest carbon tax will lead to runaway growth in renewable energy. This makes me suspect model formulation errors. For example the wind power industry say they need $40 carbon tax to be viable. Perhaps when Treasury input $23 carbon tax into their model they got about half the windpower takeup and this promulgated into the following years. A correct model would show nothing happening until carbon tax hit $40.

I feel like such a sycophant, but I reckon Barry’s comments up top were about right… but I have to concede that this is the right direction, it’s an important win, and after bedding it down for a year or two, pressure should build to remove the other distortions and hopefully open the door to nuclear power.

I’m annoyed that petrol seems to be excluded… talkback radio policy if ever there was with zero justifiable grounds.

I’m waiting until Sunday to see whether the eventual ETS is still set to permit unlimited international offsetts. I have concerns in this area.

Thanks Huon, it was interesting to see that others had been thinking along the same lines. The key to me is a rising price – it makes the whole debate about the initial price somewhat redundant, because businesses will plan for the future, not for the now, and a rising price with scheduled minimum gateways will make a really big difference to the choices being made (by Government too, if they should recommence their social duty to invest in baseload electricity infrastructure [like they continue to do for roads]).

To answer the question raised by Robert Lawrence, the general answer is that we have time to do whatever we have time to do, and failing to do that will simply mean more commitment to future problems and whatever costs are associated with adapting to those problems (and accepting that more species will probably be lost, and landscapes degraded, yes). Yes, I would like to see rapid and effective action, but that will have to be driven by some mechanism, and that’s where the reality rubber hits the socio-political road. The immediate problem I see for Australia is that the carbon price will not do anything directly to allow nuclear power to displace coal, so it will have no other direction to go than to push us towards gas, at least initially (and some improved efficiencies, although the theoretical advantage for those are already high, so there are other non-financial barriers at play here). But it will probably keep nuclear simmering on the policy agenda, and as the carbon price rises and the alternatives fail to deliver, we may get action faster than anyone might currently imagine. Remember France: 5 through to 80% nuclear in 22 years. Yes we can.

I tend to agree with Barry’s comment that a rising floor price is a necessity.

How many businesses are going to sink a few $billion into a new coal-fired plant that they know will cost twice as much to run a decade down the track?

I guess that’s where the question of “how fast?” comes in – if you ramp up the price too slowly, then new coal will still be built. Ramp it up too quickly, and it may cause serious economic problems.

Get it just right, and the pressure to come up with alternative sources of energy that actually *work* for supplying baseload will be immense. At that point, it’ll be a battle between the “renewables can do it, with a bit more development work” folks, and the “but here’s this off-the-shelf nuclear plant that can do it right now, and cheaper!” folks.

I’d take an each-way bet, myself. I think it’s worthwhile continuing to develop renewable energy sources (particularly for use in developing countries where the security situation may not be favourable for nuclear), but if the objective is (and it should be) to cut carbon emissions *now*, then nuclear is the best option on the table right now for achieving large scale cuts, and achieving them fast.

where do you stop EN… top 1000, top 2000, you always miss something. But for sure it is a flaw as a result of politics. To me it is likely that the biggest energy users are probably those who already have the most incentive to be efficient, so we are targetting companies that have already lopped off the low hanging fruit.

It is the little companies that don’t really pay much attention to their energy levels that can make a lot of changes for less $ per unit CO2.

EN, if those top 500 happen to include all of the electricity generators burning FF for power, then we’re *all* going to help pay the carbon tax.

The incentive for smaller users to pick that low-hanging fruit (as MattB suggests) will still be there. The hard thing will be making them aware of it, and putting it into effect, without another pink batts type debacle.

It’s quite conceivable that the ETS spot price for CO2 in 2015 could be less than $23/t. Reasons include a peak oil/debt induced downturn, a mad rush to decarbonise before then (unlikely) and market failure. The latter includes collusive bidding, weak umpiring by the government such as fee permits and officially approved carbon credits of no real merit. BTW the CO2 price cannot ever be zero in a proper market since permits will be needed to burn the final amounts of fossil fuel http://en.wikipedia.org/wiki/Smart_market

It is a bit of a worry that carbon credits or offsets will be open for business in 2015. Perhaps Hazelwood will be offset by a few hectares of PNG forest (why not Aussie forest?) or sustainable basket weaving or somesuch. Until then $23+ if evenly applied is another pothole in the road for fossil fuels. They will get additionally expensive due to local depletion and fuel switching. That’s why I predict gas will never displace more than a fraction of brown coal burning.

Example; suppose the carbon price was $23 in 2012, 2013 then say $30 in 2014 then dropped to $15 under an ETS. Would new coal stations be built? Probably not since coal prices and public opinion would have moved on.

1. How high would the carbon price have to go to force Australia to achieve the unconditional 2020 target?

It’s the other way around. In an ETS, the target will determine the price. ShowsOn does a neat job of explaining that the proposed policy is in fact an ETS from day 1, just with a temporary fixed price period.

2. What effect would such a carbon price have on the economy?

Not much, according to Treasury modelling, although the effects will obviously vary greatly by sector.

3. What would be the effect on world GHG emissions?

Directly? Nothing. However, an Australian commitment to an effective policy will encourage other nations to take similar action (of course many other nations have already taken similar or stronger action). This should become clear in the Durban negotiations later this year.

Imagine if every state in the U.S. said “we’re only responsible for 0.5 % of emissions, why should we do anything”? And every country in Western Europe said “we’re only responsible for 1% of emissions, why should we do anything?” And every province in China said “we’re only responsible for 0.1 % of emissions, why should we do anything?” Very constructive.

I agree with EN and John Morgan too – being “all dressed up with nowhere to go” is about the best way to put it!

Thanks ShowsOn above. You largely anticipated my commentary on Carbon “tax” v ETS. Well done. As a mental exercise, it would be useful for people to work out how different the structure of the scheme would be if it were a tax.

What I like about a carbon tax is that it encourages conservation of a scarce resource – fossil fuels – and encourages innovation ahead of the curve on energy efficiency and alternative sources of energy.

I would add that a cap and trade scheme though IMO esential, is not a total solution to the business of decarbonising. Being essential and being inadequate are not mutually exclusive.

We need to capture emissions in areas beyond scope 2 in stationary energy. We need to build new clean energy infrastructure at the expense of the old infrastructure. We need to reconfigure the design of cities to get people out of cars. We need to cut agricultural emissions.

I’d favour a progressive phase out of deductions for dirty energy. Right now it is 100% deductible. By 2020, only near zero (<5% of 2011 stationary or transport CO2 intensity) energy should be deductible, including scope 1 and scope 3 on a full lifecycle basis.

John Newlands, if the wind boys reckon they’ll be unviable if the carbon dioxide tax comes in under $40 per tonne, then I for one hope it comes in well under that level and stays there for years. With luck, they’ll pack up and stop building turbines as Denmark has done.

TK Combet has hinted that wind power will get ‘transitional’ assistance. That could be decades. If you look at any of the pro-solar websites they seem to be completely confident they will be looked after. This is despite both Garnaut and the Productivity Commission saying that all help begins and ends with the carbon price.

I am glad you think these questions are worth asking and I guess that many would think these questions cannot be answered. Nevertheless, I hope that many people will think about how to answer them. I think it is important to learn to ask the right questions, and I would probably not be the best person to answer them. Nevertheless, I will try to provide brief answers to start answering them.

1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
The likely consequences are extremely harmful and irreparable. The changes are such that almost every ecosystem is likely to face conditions beyond their capacity to adapt within a matter of decades from now. One species that is likely to suffer in particular is Homo sapiens. Rising sea levels and melting of glaciers and changes in agricultural situations will remove suitable habit for a significant proportion of the global population. With the resultant displacement it is difficult to conceive of any economic system surviving or any government remaining in control. In short, a global emergency that is unprecedented and severe beyond the worst one can imagine. (I feel like I have completely understated this answer.)

2. What are the best approaches to reducing the effects of AGW?
I think that just asking this question makes some answers obvious and I can only start this answer. There needs to a global response to this emergency that ignores national boundaries. We need widespread and rapid deployment of nuclear power as this is the only current option for reducing greenhouse gas emissions, provided it is done with a rapid phase out of coal and other fossil fuels. Energy and resources need to be made available to developing countries with a view to addressing the critical problem of rapid human population growth at a time of decreasing habitat. While a serious effort is being made to help people in other parts of the world the causes of armed conflict or terrorism will be reduced. The threat of nuclear conflict would become irrelevant if we are all working toward the same aims.

Phasing out of coal and other fossil fuels will require some kind of economic driver. Hansen’s idea of a carbon tax at the point of extraction seems the most obvious and inescapable solution.

There needs to be a widespread call to action in view of an impending global emergency so that we all pull together to find solutions.

3. How do we best inform or educate the global community of these risks and involve them in developing and implementing the most effective solutions?
This is obviously a very difficult question to answer; those who are aware of the risks need to keep this question at the top of the agenda. We need some brainstorming on this.

My feeble effort is to start by challenging those who call themselves sceptics of AGW to provide reasons why the risk can ignored. They simply cannot answer this question because there are no logical reasons. There are reasons why the sceptics have their views, but they are so inadequate that they will not enunciate them. This weakness appears to be well worth exploiting.

4. What has to change in global governance in order to make an appropriate response to the risk of AGW possible?
Firstly I think we need to recognise that the current alliance of politicians seeking to win votes with short-term goals, a media focussed on attracting attention by reacting to current issues and an electorate that is not thinking about the big issues is totally incapable of addressing the current issues. There needs to be a completely different approach.

The internet is making communication possible across the globe. This BraveNewClimate website is an excellent example of how reasoned discussion (without personal attacks and questioning of motives) can reach obvious conclusions. Revolutions have been happening in countries this very year due to communication on the Internet. Organisations such as GetUp.org.au and Avaaz.org provide a voice to hundreds of thousands of people. No longer does change depend on charismatic leadership, with which our media is obsessed. It is people addressing common obvious problems.

I envisage the invention of a new form of interaction equivalent to Facebook or Twitter in which anybody can get involved in decision making process. The approach would be more focussed on responsibility than reacting to the issues that have caught the attention of the media for the day. There would be a focus on asking the best questions and having the community brainstorm for solutions. Each issue would be linked to other issues. Common causes of problems would be identified. Once this system started to gain momentum, reason would take over from politics.

The above seems far-fetched and highly unlikely. This is undoubtedly the case. Preventing AGW (or Catastrophic AGW) is equally unlikely, but it is certainly worth trying. Otherwise, why are we reading and commenting on this site?

I agree that while we do not have the option of nuclear power in Australia a carbon tax is not much to get excited about. The proposed tax does not seem to threaten the coal industry with its exports to other countries. Getting somebody else to burn our coal does not help the global situation. If Australia’s economy depends on exporting coal (and other primary resources), we need to find new ways to make our country viable and sustainable as a matter of urgency. I can’t envisage this without nuclear power.

Disclaiming the reasonableness of doing anything about carbon emissions under the notion that “it won’t accomplish anything meaningful, overall, in light of the scale of the problem” is a common tactic – – exactly what opponents of controlling emissions do in the U.S., and, probably, everywhere.

This logic is a technique to rationalize doing nothing, and it contributes to the tragedy of the commons.

If one accepts the general (not universal, but then, how many theories are universally accepted in science??) consensus of informed scientists on climate change, then it is critically important to advance carbon reducing policies and technologies as a facet of leadership, and to set an example. Doing so is an absolutely necessary and critical, but simultaneously completely insufficient (in itself), action. This is pretty much true of all initiatives to cut climate-changing emissions, as there are so many sources of the emissions, and so many different authorities and entities that can implement those initiatives. This is the world we live in.

If you accept the science, then radical emission reductions are required everywhere. Leadership in achieving them will have to begin with some nations or states, somewhere, effectively achieving emissions reductions through means that can be referenced as reasonable and not-so-costly-as-to-be-unacceptable, thus providing a viable model. Changing the framework in which the market works will also stimulate the search for, and development of, cheap ways to comply.

If everyone waits for someone else to be the first mover, then no one will move first. The consequence of that will be that the environment, and the species and individuals that rely on its relative stability, will suffer the consequences.

Handing out billions of dollars for “renewables” is completely open to fraud and abuse and is an inefficient waste of money, with a whole industry of dodgy operators springing up overnight to get their share of the free money, just like we’ve already seen with insulation and solar photovoltaics.

To get real changes to the carbon dioxide emissions intensity of stationary energy generation, which is where the bulk of the problem is and where it’s easiest to fix, in the most economically efficient fashion possible, without wasting money, a free-market based approach, or almost-free-market approach, is best.

We should keep the market as free as possible. In a free market, however, dirty fossil fuels are the cheapest option and the option always chosen by the market, because the market does not factor in the external costs associated with carbon dioxide emissions (and other forms of pollution from fossil fuels).

So let’s implement a small perturbation to the free market, in the form of a carbon dioxide tax or emissions trading scheme, so that the external costs of fossil fuel use corresponds to dollar value that the bean-counters can understand.

However, if electricity utilities just keep burning coal and they simply pass on the cost of carbon dioxide emissions to the consumers’ electricity bills, then we accomplish nothing. We all pay the electricity bill, of course – nobody has any real choice. The carbon price really needs to motivate the utilities to replace fossil-fuel generation with clean forms of generation, and the specifics of the implementation of the scheme needs to be done with this in mind, so that it doesn’t just result in higher electricity prices and no other fundamental change.

Everybody already pays the bill, so we already have a motivation to increase end-use efficiency where practical. But it is only practical to increase end-use energy efficiency to a limited extent, especially for the householder, and you can only push it so far without spending lots of money in capital investment to increase efficiency, which many people can’t afford to do.

The notion that we must drive people’s electricity bills higher and higher to punish them harder and harder so they’ll use electricity is completely the wrong idea.

The average carbon dioxide intensity of Australia’s power stations per kWh generated is amongst the highest of anywhere in the world. It’s not right to punish the public and make them feel like they’re guilty just because they dare to use some electricity. The ridiculously high average greenhouse gas emission intensity of the power stations has to be changed.

If consumers really had a choice, and they could choose an electricity provider that would sell them electricity from clean sources at a cheaper price than fossil-fuel electricity, then of course that makes sense – but I cannot foresee that scenario happening any time soon.

Fossil-fuel subsidies should be eliminated, and there should be no special handouts or exemptions or subsidies for the fossil-fuel industry to “compensate” them from the effects of a carbon dioxide pricing system, because this of course defeats the entire point.

What we need is a level playing field – this means no fossil-fuel subsidies or exemptions, but it also means no special handouts and subsidies or hugely inflated feed-in tariffs for solar energy or wind energy. It means no special subsidies or handouts for nuclear energy or any other particular energy technology, but it also means the removal of any legislation that says that any particular energy technology, such as nuclear energy, is banned or illegal.

Such distortions of the market prevent the market from figuring out what the best and cheapest clean energy technologies to replace fossil-fuel electricity generation really are and implementing them.

A carbon dioxide pricing mechanism added to an otherwise free market, with no special subsidies for anybody, puts every clean energy technology on a level playing field, and the free market decides what the most realistic, available, scalable, reliable, useful, deployable and cheapest clean energy technologies are to replace coal and fossil-fuel based electricity generation.

Unfortunately, the current situation with Labor, influenced by both big industry and by the Greens, means that we are going to get the worst of both worlds – widespread exemptions and subsidies and handouts for coal-fired power utilities and other high-pollution sectors, and huge amounts of money spent on subsidies and handouts and mandated high feed-in prices for inefficient and expensive “green” energy such as solar. And no removal of legislation barring any use of nuclear energy.

“A large group of Lib Dems are concerned about clause 78 of the bill, which MPs will consider on Monday or Tuesday, that asks them to support a carbon floor price. This mechanism penalises fossil fuels but not low-carbon energy sources, such as nuclear and renewables, and the MPs believe it hands a large financial windfall to nuclear power – effectively a subsidy.”

“We need to make a stand and ensure that the nuclear industry does not benefit from being an unintended beneficiary of tackling carbon emissions.”

Carbon price bad… because nuclear energy doesn’t emit CO2!

As far as excuses for opposing a carbon tax are concerned, there’s a new one.

We need a carbon price… and we need special arbitrary ideology-based legislation that punishes nuclear energy, even though it is free of greenhouse gas emissions!

The whole point of a carbon price is that it’s a carbon price, not a subsidy specifically directed to wind or solar or whichever energy system you ideologically think is good and “green”.

Australia gives big handouts of money to coal-fired generators to compensate for the effect of the CO2 tax… these guys want to ideologically impose special extra taxes or something just to punish nuclear energy… to compensate for the effect of the CO2 tax.

@ Eclipse Now ‘How fast can they build the prototype and then commercialise these GenIV reactors flying off assembly line? Older reactors were hand crafted on site. Each is an individual project like a Rolls Royce, and cost as much in relative terms. These newer reactors will shoot out of the factory like so many Hyundai’s, and the modular parts will be trucked to site and clipped together like so much giant sized Lego.’

Gen III+ reactors (AP1000, ESBWR) are also largely ‘modular’ with parts built in a factory and assembled on site. We can do this now. New designs should be developed, but there is no need to wait. In 10 years China will be building AP1000 (or their higher-power variant the CAP1400) reactors at rates that will astonish the world. They are building the module factories now.

“We need to make a stand and ensure that the nuclear industry does not benefit from being an unintended beneficiary of tackling carbon emissions.”

Hahaha, thanks for that Luke Weston.

If the UK doesn’t keep building nuclear, they’ve got a snowball’s chance in hell of making a 50 % reduction in GHG emissions by 2025. And Australia has a snowball’s chance in hell of a 50 % reduction by 2050 if we don’t allow it in this country!

It might be less distressing for the true believers if the MRET was quietly dropped. Believers that renewables will replace coal that is. If in round terms we want 20% of electrical generation in 2020 to be renewable and we are on 8% now, about half of that from mid 20th century hydro. We can assume hydro has maxed out and total generation will be roughly constant. Therefore an MRET assumes a 4-fold increase (4% to 16%) in non-hydro renewables in less than 9 years. Say another 5,000 MW average output.

But wait, we’ll have 150-300 MW peak of solar flagships built by 2015. To be generous take a third of that for average solar capacity, ignoring any gas boost. If we want that warm inner glow it will have to come from something besides renewables.

But then which politician is going to take all the credit for the automatic adjustments made by the market? Also each party needs a good legacy to sell to the voters.

I was wondering today just what the response would be so far if governments weren’t seen as the ‘out clause.’ Would there already be a carbon market on a major stock exchange with the ‘localised’ information already filtering through the world economy.

I still don’t think emissions per captia is a useful start for a global framework. Firstly it’s contrary to the principles of classical liberalism that the world as we know it functions. If you don’t allow accumulation of capital (to some degree) into the best hands then you get massive waste. Likewise if Australia has a comparative advantage in emissions intense industry then perhaps we should have to option to trade with another country with a differing comparative advantage who may not be able to utilise some emissions as productively as we do. Effectively paying them to forgo emissions.

Under this case if it proves no country (if we insist on national quotas) has spare credits to exchange then Nuclear power becomes a comparative advantage, if Australia choses not to bite the bullet, then it’s only logical that we give up a large chunk of current jobs and look elsewhere. The fact that there has been no serious debate as to how renewables will fill the gaps is telling. Once again Ivory Towers are obstructing the view.

Gen III+ reactors (AP1000, ESBWR) are also largely ‘modular’ with parts built in a factory and assembled on site. We can do this now. New designs should be developed, but there is no need to wait. In 10 years China will be building AP1000 (or their higher-power variant the CAP1400) reactors at rates that will astonish the world. They are building the module factories now.

@ Luke Weston . Yes I totally agree with Barry, it is a well written post.
Talk about the lunatics being in charge of the asylum!!!
As an interesting aside , in the Netherlands I read ads in the local papers where electricity consumers could choose “atoomstroom” ie . nuclear electricity. I assume the energy retailing authority offering this form of electricity buys their power from France ? So, it seems there could be a market for power that gives one the option to pick which form of generation one prefers.I just wish we could have that option here in Oz.

Excellent post (mostly). However, there are parts I do not agree with. I won’t comment on the many bits I agree with, but will comment on what I disagree with.

We should keep the market as free as possible. In a free market, however, dirty fossil fuels are the cheapest option and the option always chosen by the market, because the market does not factor in the external costs associated with carbon dioxide emissions (and other forms of pollution from fossil fuels).

Yes. We should keep the market as free as possible. However, a carbon price is a government intervention to distort the market – that is, to distort the market even further than it is already. The proposed carbon pricing scheme is being driven mainly by politics and ideology, not a rational assessment of a problem and how to address it.

You say: “fossil fuels are the cheapest option and the option always chosen by the market”. But this statement is based on a wrong starting premise. Fossil fuels are cheaper because we’ve been intervening for 50 years to massively increase the costs to nuclear while distorting the market in favour of fossil fuels and renewables. The whole market for energy has been massively distorted by previous government interventions. Instead of trying to correct the past mistakes, the carbon pricing advocates want to continue adding more bad interventions. This is a wrong approach. It will not lead to the deepest and most rapid cuts in CO2 emissions. In fact it will preserve, for much longer, the very problem that got us here in the first place. It is bad policy.

So let’s implement a small perturbation to the free market, in the form of a carbon dioxide tax or emissions trading scheme, so that the external costs of fossil fuel use corresponds to dollar value that the bean-counters can understand.

Sorry. I see that statement as silly. First, you say the “perturbation would be small. Why do you say it is a “small perturbation”? How high would the perturbation have to go to achieve the unconditional 2020 CO2-e emissions targets? What would be the effect on the economy of a carbon price high enough to achieve the unconditional 2020 target? What would be the effect on world emissions? What would be the effect on the climate? These are genuine questions. Those arguing for a carbon price cannot simply dodge them because they don’t like the answer.

If consumers really had a choice, and they could choose an electricity provider that would sell them electricity from clean sources at a cheaper price than fossil-fuel electricity, then of course that makes sense – but I cannot foresee that scenario happening any time soon.

True, low-cost, low CO2 emissions electricity, will not be available for as long as Labor, the Greens and the environmental NGO’s block nuclear and block low-cost nuclear. But surely, all the effort should be focused on changing the polices of those ideologies rather than implementing more, bad policies and more symbolic gestures.

Such distortions of the market prevent the market from figuring out what the best and cheapest clean energy technologies to replace fossil-fuel electricity generation really are and implementing them.

True. But your words are paying lip-service to what is the real underlying cause of the problem rather than genuinely addressing it it. Over the past 18 months BNC regulars have demonstrated a strong resistance to looking into the impediments to low cost nuclear – the impediments that would make nuclear more expensive than coal in Australia. There has been no genuine attempt to look into this matter.

A carbon dioxide pricing mechanism added to an otherwise free market, with no special subsidies for anybody, puts every clean energy technology on a level playing field, and the free market decides what the most realistic, available, scalable, reliable, useful, deployable and cheapest clean energy technologies are to replace coal and fossil-fuel based electricity generation.

True. But we are never going to get to “an otherwise free market, with no special subsidies for anybody” if we keep adding more bad policies. It is naive to think that if we add a carbon price this will speed up the rate that we will address the genuine underlying problem and removing the many distortions we’ve already imposed.

Your quote from the Guardian about “Carbon price bad… because nuclear energy doesn’t emit CO2!” demonstrates that it is the ideology of the Progressive parties that are the problem. This is what needs to be tackled. Not implementing more bad policies proposed, pushed and forced on us by the Progressives – the cause of the problem in the first place.

Of course, this is a defeatist argument. “we only emit 1% of global CO2 emissions so nothing we do matters”. Oh yes very constructive attitude.

I am not quite sure whether your point is:

1. it is a defeatist attitude to argue that we should not get stated on the road to implementing nuclear in Australia because it is politically impossible and won’t make much difference to world emissions anyway, OR

2. it is a defeatist attitude to argue that we should not implement the proposed carbon price because it will not cut world emisisons.

The reason I argue Australia should not implement the proposed carbon price is:

1. it will damage the economy (severely if it is raised high enough to achieve the unconditional 2020 targets). If we slow the economy we will be less able to take the best actions in the future

2. a carbon price in Australia will not reduce world emissions. The emissions will be exported to other countries – such as China. That is what EU has done. EU reduced its emissions a little, but increased the developing world’s emissions by more. Manufacturing using lower emissions EU electricity was replaced by manufacturing using higher emissions developing world electricity.

3. If Australia imposes a carbon price before we have removed the impediments that prevent us implementing low cost, low emissions electricity generation, the only option we have to reduce emissions is to export the emissions intensive industries.

4. Since an Australian carbon price will not cut emissions, it will not change the climate.

5. It is just silly to argue Australia implementing a carbon price will lead the world by example.

6. A massive increase in bureaucracy will be required to administer all aspects of the climate pricing scheme. And a massive increase in the monitoring, reporting and administration costs for business and industry. And more lawyers, accountants and court time handling the disputes. And Carbon Cops and fraud squad. The additional costs go on and on. All this extra administration is a dead weight on the economy. This is very bad policy. Once implemented it will be a dead hand on Australia’s economy for ever. The alternative is so much easier. It avoids all this extra cost.

7. We have not looked into the alternative. It is off the agenda because the Progressives don’t want to even consider it.

8. To implement a major new market distortion and serious impost on the economy, without thoroughly investigating the alternatives, is totally irresponsible.

I agree almost completely with your reasoning on internalisation of the pricing of fossil HC fuel combustion impositions on the commons and likewise of the principle of a level playijng field for energy technologies. Nevertheless, I’d like to make one or two observations.

Handing out billions of dollars for “renewables” is completely open to fraud and abuse and is an inefficient waste of money.

(deleted unnecessary editing of a direct quote.)

It entirely depends on how these billions are “handed out”. It seems that an independent body is to oversee this handing out of funds, and provided the protocols are robus and coherently specified, and the due diligence is adequate, then the probability that significant fraud, or even poor expenditure of funds will ensue is low. What we need is for the protocols to ensure that performance specifications are measurable in something like real time and consistent with reasonable program goals in costs, LCE, LOLP, availability etc. and that auditing is at arm’s length and competent, and that those offering warranties on performance have a good deal of their own skin in the game. Once contracts are settled, their terms must not be hidden behind “commercial-in-confidence” shields and anyone who has a problem with this level of transparency ought not be permitted to access any funds or offfer for tender. If funds remain unallocated, then that’s too bad.

While I certainly agree that resort to “the market” is a key parameter of policy, this does not entail running in horror from disingenuous accusations about “picking winners”. The reality is that unlike the retail and service end of goods and services, the infrastructure options available to large communities are actually not that diverse. If we aren’t using coal and want to start tomorrow on lowering emissions the options are probably … gas. For better or worse, we have sunk cost investments in wind and also rooftop PV. We need to find a way of making these existing facilities maximally useful, even if as most of us here believe, these were purchased at well above the odds. Gas is probably the easiest way to do this over the short to medium term. Even if on Sunday (implausibly) Gillard overturned the ban on nuclear power, and The Greens and Windsor or the Opposition ran dead, we would very probably not see a single kWh of nuclear-generated electricity before 2020 and possibly not until 2025. We might not even start building until 2016. A quick changeover that is politically and technologically plausible entails lots of gas. That, along with hydro, can underpin wind and solar in much the fashion that Garnaut suggested in 2008.

The state is actually very good at doing one thing — raising loans. They can go into capital markets and raise funds more cheaply than anyone, and so a financing arrangement in which the state offered loan guarantees to successful tenderers or directly lent them the money at the longterm bond rate could in principle, be viable. Certainty about long term costs is a huge help, especially when capital outlays are large.

What we need is a level playing field – this means no fossil-fuel subsidies or exemptions, but it also means no special handouts and subsidies or hugely inflated feed-in tariffs for solar energy or wind energy.

I agree. The performance specifications ought to be written so as to be technologically neutral but while I’m not keen on FiT I see no large problem with paying people what they would be paying if they purchased the energy at that time for energy supplied. Thus, if you are paying $0.10kWh, that’s what you get paid for supply.

I continue to believe that we need to move quickly to revisit the question of nuclear power of course, but there can be no doubt that Fukushima has chilled debate on this very severely. We are back roughly where we were politically in the wake of Chernobyl. People who were sympathetic to at least a discussion now look nervously at their feet. I am really angry that (deleted pejorative) TEPCO allowed this to happen, and thus provoked another round of angst-ridden venting on how dangerous the whole technology is. While we know how specious such claims are, the hard reality is that the public at large is back to being horrified. Even the deniers don’t bother throwing this objection at The Greens with the same enthusiasm any more. So we need to work with this new reality — favouring a new “energy commission” that can keep us all informed in a technologically neutral way about the options in clean energy infrastructure, IMO.MODERATOR
Please post quotes as they were originally written.

I feel compelled to repeat a comment Professor Brook posted recently on the current Open Thread.

trying to reduce cost imposts on nuclear is important, but it will be a difficult problem to sort out politically, and at present (absent a carbon price), I see little evidence of any motivation for pollies or bureaucrats to get stuck into solving these issues (or how much savings will ultimately be realised — can it ever be cheaper than coal in Australia, absent a carbon price? Don’t know).

[emphasis mine]

I think this question is important. It can be broken down a bit too:
1) Is it physically possible for it to be cheaper?
2) Is it politically possible for it to be cheaper?

And if the answer to either of these questions is “no”, and the LCOE from nuclear is higher absent a rising carbon price, how do the economy-wide costs and benefits of these generation technologies compare when externalities (climate and non-climate related) are factored in? Obviously, various assumptions come into play here too (e.g. projected differences in LCOE).

I mystified by this news story on how carbon tax will benefit Tasmaniahttp://www.abc.net.au/news/video/2011/07/08/3265232.htm
Breaking it downhydro generation – since it was built before 1997 it wasn’t even eligible for RECs which are set to be discontinued in any case.wind generation – one perhaps two new wind farms of about 200 MW nameplate may go ahead since brown coal fired electricity imported via the Basslink cable will increase in price. This contradicts claims that $23 c.t. isn’t enough.aluminium smelting – one establishment using a third of the State’s electricity says it will get some kind of advantage, perhaps they mean compared to Qld, Vic and NSWzinc electrorefining – the Hobart smelter in Andrew Wilkie’s electorate thinks it will get an an advantage. Compared to whom I’m not sure.

No mention of tree planting credits. The unstated assumptions may be that windpower will keep getting subsidies and the metals industries that need baseload have first dibs on cheap hydro. The wet year c/- the winding down La Nina puts plenty of water in the dams for spot priced electricity export. Otherwise carbon tax may be of no short term benefit. That benefit is long term if it helps ameliorate climate change and weaning Tasmania off Victorian coal power.

I think most of you are blind to what is going on. Carbon taxes are simply an ‘icing on the cake’ of renewables. Carbon taxes *will* exclude nuclear or don’t you see that? You are all playing with fire.

In *every* country in the world where renewables have taken off, they’ve *ignored* carbon taxes almost completely (and effectively) by:

No carbon taxes, none, zip! Don’t you GET IT??? This is a straw-man distraction.

We should fight for nuclear in the *exact* same way: it needs to be mandated. Carbon effluent needs to be *legally phased out* and replaced MW-per-MW with non-carbon energy.

You will see carbon taxes implemented and nuclear excluded because that is the whole point of the wind and solar lobbies.

We have a means of generation and should argue for it on that basis alone.

We need a 10 – 15 year plan [COAL2NUCLEAR]:
Year 1: plans submitted by commission to eliminate coal plants.
Year 2: all coal plants placed in a phaseout mode; specific targets of nukes to be built.
Year 6: COD (Commercial On-line Delivery) for 1st set of nukes. At COD coal plants are separated from the grid and decommissioning started. MW per MW subustition or some ratio there for to account for growth (I think 1000MWs of nuclear replaces 750MWs of coal).

I agree we need a policy that will actually achieve the cuts. The policy must also ensure we maintain our energy cost advantage and our economic competitiveness.

I agree we need a realistic schedule. I previously laid out a schedule to 2020. https://bravenewclimate.com/2010/01/31/alternative-to-cprs/ . It does not make us achieve the Australia’s unconditional 2020 emissions targets – it is not realistically achievable – but it would set us on the fastest trajectory to the deepest cuts in the decades ahead. Once electricity is low emissions and low cost, we will be well set up to reduce emissions from other sectors – such as transport and other stationary energy use.

The worst thing we can do is to impose more bad policies that are in effect just symbolic gestures to keep the noisy groups happy and provide another symbolic “win”. The worst thing we can do is to damage the economy, especially as it is for no environmental gain. We should not follow Europe’s example, nor do what they tell us to do for their economic benefit.

We need to scrap the renewable energy target (RET), Renewable Energy Certificates (RECs) and feed-in tariffs (FiTs), set a low initial carbon tax at about $10/t, …, and have some legislated schedules (gateways) such as a floor price of $20/t by 2015, $30/t by 2020,

This is not consistent with achieving the unconditional 2020 target. A $30 carbon price would not make Australia achieve the target – not even close.

Therefore what do you actually advocate:

1. a carbon price starting at $10/tonne in 2012 and rising to $30/tonne in 2020 or

2. the unconditional 2020 targets.

Do you advocate 1 or 2? It can’t be both because they are mutually exclusive.

I think most of you are blind to what is going on. Carbon taxes are simply an ‘icing on the cake’ of renewables. Carbon taxes *will* exclude nuclear or don’t you see that? You are all playing with fire.

In *every* country in the world where renewables have taken off, they’ve *ignored* carbon taxes almost completely (and effectively) by:

David Walters,thanks for enunciating a timetable for coal phase out, nuclear phase in. I agree with you that we need to ,just do it. I think we should be able to do it a bit more quickly than twenty years. All of the regulatrory and licensing guff will take lots of time but the actual build time, depending on the type of reactor is much quicker than it was. Hitachi/GE are marketing mid sized [400-600MW and up to 900MW] with a build time of 34 months according to my reading. And PBMR’s don’t take very long to get up and running. I’ve suggested to BHP Billiton that they might look at them as source of power for their Olympic Dam expansion. They could also very usefully shift their desal plant from Whyalla to the west coast [Ceduna] and power it with an appropriate sized nuclear reactor. Those measures are part of my development plan for SA. iI think I mentioned that in a previous blog

While I have indicated repeatedly that I agree strongly with your advocacy, I don’t agree that a $10tCO2 starting price is adequate. While I accept that the size of the starting price ought not to be a dealbreaker, it seems to me that unless the pricing scheme had near total coverage by sector and reached down to pretty much everyone with an entreprise employing the equivalent of 14 employees full time, that $10 simply wouldn’t do, unless of course

a) there was a shadow compliance mechanism which in effect, forced up the total price for non-compliance — a regulatory measure forcing BPR to achieve lower CO2 intensity

and/or

b) there was a steady progressive phase out of the deductibility for tax purposes of dirty energy

and/or

c) there was an escalator in the cost of permits that was a lot more aggressive than Garnaut’s 4% post inflation. We would need to be at $AUD(2011)50tCO2 by about 2020.

Ideally, a combination of each of these measures would be devised. We need every sector covered, and pretty much everyone above small businesses in. Fossil HC subsidies should vanish entirely.

@ David Walters,
I can easily agree with your “Just do it” post but how do we get the vast majority of Australians on board? Say BNC all agreed with you. What then?
* Would we all contribute a bit to make a DVD?
* Would we put up more posters in University libraries and shopping malls?
* Would we just blog more about it?
* Would we agree to target certain political forums and calmly and kindly influence opinion there?
* Would we have certain ‘arms’ of the BNC community targeting different projects?
* Would we make sure our local libraries had a copy of a certain pro-nuclear book?
* What else have I forgotten?

I’m not expecting any surprises tomorrow, just wishful thinking and preaching. From now til July 2012 I expect lobbying and special interest pleading to further weaken the impact of the carbon tax. In the ensuing first year of the tax at best I expect minor efficiency gains and belt tightening. During that time we will see renewables subsidies extended (contrary to recommendations) and hypocritical ‘direct action’ through large cash handouts to coal generators to build combined cycle gas plant. Those plants will be medium sized not full replacements.

That takes us to 2013 when we could be back in El Nino conditions. We’ll have expensive electricity but minor emissions reductions if any. It should become clear that the efficiency/gas/mandated renewables path is both inadequate and expensive. At the same time Germany and Japan will tell if they managed to reduce emissions while using less nuclear power. Thus I see the present course of action as a necessary but slow learning step.

TK agreed the Whyalla desal (for OD mine) should be relocated to Ceduna. An energy park could combine desal, 3rd generation NP, uranium enrichment and eventually 4th generation. New transmission could be regarded as a stage of an eventual link between the eastern and western grids.

As things stand, EN, there’s no way you could “just do it”. Neither major party will touch it until the other moves, so there is a Mexican standoff. Then of course you’d need the states on board as well. This side of some sort of bonapartist coup, it’s not happening any time soon.

We must patiently explain why nuclear power is essential and ideally, IMO, have some independent well qualified body like the Productivity Commission (but with more scientific and engineering expertise and a brief to engage with the public) continually generating reports on the clean energy options in a technologically neutral way. It wouldn’t just or mainly report on nuclear power, but would look across the whole spectrum of options, giving timelines, scenarios, costs, technical feasibility and addressing commonly expressed concerns and beliefs — a kind of IPCC of Australian energy.

That might take much of the heat out of the debate forcing it away from culture and back onto the terrain of utility. I still see that as a ten-year project though.

[First, Hi Fran! Always good to see you around here and other places…it’s been too long. Any thing new on the bio-diesel from algae stuff? I’m always fascinated with you turning me on to this.]

All, thanks for responding. On the “20 years”. We can do it in *5* but that would require a huge shift which I don’t see happening. I think with the things going on right now with IFR, and the more recent advances with LFTR (most notably the Chinese investments) I would revisit the question in about 4 years. I have zero doubts “it could be done” but realistically, that is 100% “politically”, actual commercial deployment looks to be about 20 years from where I sit. But “that’s OK”, really.

I’m maybe a minority but I want to see the success of a full on deployment of Gen III first in order to step into Gen IV. I don’t think any Gen IV is going to be acceptable until Gen III is given a reasonable shot. It’s another kind of thread but I’m convinced of this anyway.

My whole point in phasing out coal, that is in raising it, is that carbon taxes is not the way to go. This is not like H2S taxes on coal in the US or other smaller things. A carbon tax is *profound* on the economic level, even with deductions and subsidies…we don’t want to live like that. We want to produce what’s right. So it means getting down and dirty and fighting for nuclear energy in the phase of a LOT of public doubt, especially in both Australia and in the U.S.

I think carbon taxes in either country will be used to *exclude* atomic energy. I can’t see the movers and shakers in the ruling classes of either country accepting nuclear as a carbon free source of energy. The antis/Greens are very explicit about the tax money being used to subsidize solar and wind and NOT nuclear. So, I’d rather spend out time trying to convince people of the need for fission rather than trying to create a fake economic advantage for nuclear by taxing coal.

Peter, thanks for your comments, it’s good when polar opposite political people see eye to eye (then again, Adam Smith and Karl Marx both opposed tariffs :)

We must patiently explain why nuclear power is essential and ideally, IMo, have some independent well qualified body like the Productivity Commission (but with more scientific and engineering expertise and a brief to engage with the public) continually generating reports on the clean energy options in a trechnologically neutral way. It wouldn’t just or mainly report on nuclear power, but would look across the whole spectrum of options, giving timelines, scenarios, costs, technical feasibility and addressing commonly expreessed concerns and beliefs — a kind of IPCC of Australian energy.

I completely agree Fran!

Most Australians don’t blog — they’re just not interested enough. They Facebook their jokes and cats and recipes, but when it comes to thinking about the bigger issues, they just go with the current Zeitgeist.

We need meme changing action. We really need an IPCC of energy to analyse the options and tell us non-technical sorts what is actually possible now and how much it will cost. (They should always keep an eye out for might be on the horizons, of course, but it can’t be a body devoted to wishful thinking).

I’d love to see what such a body made of wind, CSP, biomass + a few big pumped hydro saltwater dams across the Nullarbor.

Compare and contrast with a Gen3+ nuclear grid, and the results should speak for themselves!

[First, Hi Fran! Always good to see you around here and other places…it’s been too long. Any thing new on the bio-diesel from algae stuff? I’m always fascinated with you turning me on to this.]

Sadly, the stuff I’ve seen lately on EROEI, scale and cost don’t recommend it. At best, unless there’s a serious technological breakthrough I don’t see it being viable, which is a damnded shame. There’s some work happening around using it in aircaft but still not commercialised. Personally, I’d like someone to do a serious CBA on its use not as a fuel but in biosequestration, which might be a lot more promising. If that could be done for $50tCO2, and scale up to the levels needed then we could be onto a winner.

I’m maybe a minority but I want to see the success of a full on deployment of Gen III first in order to step into Gen IV. I don’t think any Gen IV is going to be acceptable until Gen III is given a reasonable shot. It’s another kind of thread but I’m convinced of this anyway.

Hi David,
is that to do with the fuel cycle? Didn’t Tom Blees say something about us needing 20 years to breed up enough fuel from the waste we have sitting around in cooling ponds?

I’m sure there’s a thread here somewhere — with a title like Nuclear pathways or something. If you wanted to write up something and ask Barry to submit it I’m sure he’d either find the appropriate thread or create a new one.

Most of the people who really like wind and/or solar are also big fans of “just do it”. For reasons not entirely dissimilar ot the right, the more ostentatiously left environmentalists don’t like carbon trading/pricing either. They just want to invest directly in new technology — BZE is case in point.

Having an IPCC of energy is just the sort of thing they’d have to endorse, but in practice — precisely to avoid thwe kinds of trolling charges made against the actual IPCC, there would need to be a very non-technology exclusive brief for it. It would need to be abale to evaluate efficiency, energy usage avoidance, demand management, and the whole suite of technologies being deployed in energy systems around the world with application here.

I agree that the coal 2 nuclear plan is certainly the optimal way forward. The problem is, from my perspective, that it’s so far off the political radar in Australia that we’ll probably be burning fossil fuels well into the next century waiting for a plan like that to happen.

We need a catalyst to get us there, and a carbon price is on the political agenda.

I don’t understand why you think a carbon tax *will* exclude nuclear? This isn’t the case in the UK, for example. Conversely, the Australian government excludes nuclear without a carbon price. I admit it will favour gas in the short term, but resource scarcity and a rising price limits this.

And just for clarification, do you think we should oppose a price on carbon, or stop wasting time debating it and ignore it?

I’d agree, we should not be looking for short term political solutions.(deleted personal opinion on other’s motives)
But I don’t understand what you meant by arguing for a carbon price starting at $10 and rising to $30 by 2020? I think my question is a fair question.

I believe the arguments against the proposed pricing scheme are strong and persuasive. I and others have puit them in numerous comments on various threads and recently on Open Treads 15. 16 and 17 and on this thread. They have not been refuted nor seriously addressed. Mostly they are ignored and avoided.

I hope you might consider them seriously, not just reject them out of hand. You demonstrated your ability to change your beliefs on nuclear having looked at the pros and cons. I believe, a genuine, unbiased, objective analysis of the proposed carbon pricing scheme would lead you to change your opinion about this too.

I think I misunderstood your short reply to my question. For others, my question was:

Therefore what do you actually advocate:

1. a carbon price starting at $10/tonne in 2012 and rising to $30/tonne in 2020 or

2. the unconditional 2020 targets.

Do you advocate 1 or 2? It can’t be both because they are mutually exclusive.

You answered:

Peter, the answer is 1 – I don’t give a toss about short-term and meaningless political targets.

OK. I understand now. Sorry for the previous reply. It is Australia’s unconditional 2020 emissions targets that you are saying are the “short-term and meaningless political targets”

I agree with this. I agree we need to focus on what will get us the most rapid CO2 emissions reductions trajectory for the long term – through until we are mostly decarbonised.

I’d now add my points.

1. We will only achieve that by taking an economically rational approiach.

2. We will achieve the goal by building a broad political consensus. It is achievable, but not in the highly confrontational and economically irrational way it is being approached by the Progressives (and been approached for the past 20 years at least).

3. Carbon pricing is failing everywhere – for many reasons. It is a wrong approach (see comments up thread and on previous threads).

4. The answer is not in carbon pricing until the major emitters agree a an economically efficient, international scheme for internalising the externalities of energy production and use and carbon emissions from non energy applications

5. In the meantime, and as the first step, Australia should put most of its effort into working out how we can get low emisisons electricity generation in Australia on a trajectory that will be lower cost than coal (I’ve suggested how we can do this on the “Alternative to Carbon Pricing” thread.)

I believe the arguments against the proposed pricing scheme are strong and persuasive. I and others have puit them in numerous comments on various threads and recently on Open Treads 15. 16 and 17 and on this thread. They have not been refuted nor seriously addressed. Mostly they are ignored and avoided.

I hope you might consider them seriously, not just reject them out of hand. You demonstrated your ability to change your beliefs on nuclear having looked at the pros and cons. I believe, a genuine, unbiased, objective analysis of the proposed carbon pricing scheme would lead you to change your opinion about this too.

That’s rich Peter. You haven’t addressed all the links, but frequently just employ the “Ignore, Divert, Re-assert” strategy. I’m really tired of you whining about no one paying you any attention when you don’t pay them any attention. You tend to write off whole arguments with flippant remarks about the source of the argument, but without dealing with the material in the argument.

I don’t believe you have demonstrated *your* ability to change your mind on a *single* thing.

It’s just tiny a fraction off the *growth* in GDP — it assumes the overall economy is still in pretty good shape actually. You’re not providing evidence of *damage* to today’s economy, by hypothetical shavings off how much *richer* we *might* have been in the future.

If you really *want* to study something which could do *serious* damage to the economy, study peak oil. But this tiny, irrelevant shaving off tomorrow’s *growth*? No, I won’t be losing sleep over that.

Without a low-cost, low-emissions alternative for coal fired electricity generation it will not be possible to achieve the unconditional 2020 targets other than with long, deep recession.

Ignore, Divert, Reassert. Seriously, is the above paragraph in some copy and paste software you’ve customised for BNC? I’m a fan of nukes and accept that they are the only way forward — I’m just not a fan of pointless, divisive nagging that runs this community down.

Global pollutants require global policing, implying a need for global surveillance. One nation could monitor the other nations’ emissions, and the public could monitor the emitters in their own countries.

Also under pressure is a successor CO2-mapping satellite, ASCENDS , a project to use Lidar for higher resolution. Presumably, suspect emissions could be targeted and measured.

I for one am grateful that Congress has funded NASA over all these years, but it is a worrying dependence. Perhaps, as climatic disasters mount, a sense of global emergency will help launch these tools for global surveillance.

Could a carbon price of $30 make economically viable not only CCS-equipped natural gas plants and n-th nuclear, but even first-of-a-kind (FOAC) nuclear? Perhaps so. Have a look at this summary of a paper co-authored by Barry Brook.

According to final sentence of the summary, FOAC nuclear would be about $30 per MWh higher than later nuclear plants–and new coal plants. A $30 carbon charge would bridge that gap; and subsequent nuclear plants would beat the price of new coal.

Based on Productivity Commission figures even a $20 carbon tax puts pulverised black coal, brown coal and combined cycle gas up around $105 per Mwh. We can presume the latest hybrid idea (gasified brown coal + natural gas combined cycle) is at least that expensive as well.

Now add to that the expected boom in thermal coal imports by China which will raise the world price of coal. Then add the fact that Australia’s population lives in the southeast but the best gas resources are in the northwest. Then add a predicted surge in gas demand (LNG/CNG/GTL) for transport and we have not just carbon tax but three other factors driving up the price of fossil fuels. Somethin’s gotta give.

How high would the carbon price have to go to force Australia to achieve the unconditional 2020 target?

The effective (not the explicit) price is probably going to have to approach an average price of about $30tCO2. That’s the price at which the full cost of the explicit price plus any other regulatory costs, and other incidentals would make enough abatement fall under the cap. Of course, if some measures prove more costly than the $30 due to the implementation method, we might need a higher effective price. MRETs and FiTs probably need to go.

What effect would such a carbon price have on the economy?

Probably very little net negative effect. One must also take into account the exposure to trade penalties for not acting. It remains unclear but we won’t know in time to adjust anymore that one can back the Melbourne Cup winner aftrer the race is run.

Where will the emissions cuts come from?

Mainly, transition from old coal to new gas.

By how much would world emissions be cut if Australia achieved the 2020 targets?

166mtCO2e, obviously

By how much would this change the climate?

On its own, not much, but as part of a move to price emissions on a world scale, quite a bit. Australia isn’t the only country whose citizens run beggar my neighbour arguments, and Australia is the leading per capita emitter amongst advanced nations

Would our trajectory of emissions cuts (and other benefits to society) be better served (i.e. deeper emissions cuts attained by 2030 and beyond) by taking the policy decision to remove the impediments to low-cost nuclear now, so we can rollout nuclear earlier, faster and cheaper?

Of course, but that still doesn’t mean we don’t need a carbon price now.

Should all potentially viable alternatives be analysed, in a proper option analysis, before deciding on and committing to a policy and legislation?

We’ve been there done that in relation to carbon pricing. We need to get on with it. Of course, if your question was in addition to carbon pricing once it is done then yes. We should look at all the options without abandoning carbon pricing.

I notice that the four questions have still not beenm answered. In fact, my reposting with link to one of the earlier posts has been deleted as repetitious. Since the catastrpophe argumetns are repeated ad nauseum without ever being deleted we can only conclude that this is avoidance of unwanted questions, and censorship rather than balanced moderation .

Following I’ll post the questions together with my partial answers. However the intention wass not for me to answer them. It was an attempt to try to get BNCer readers to think objecively and think out side their advocacy.

1. How high would the carbon price have to go to force Australia to achieve the unconditional 2020 target?
A. CIE says about $55/tonne CO2-e. given the assumptions they used, I suspect the carbon price would have to by much higher

2. What effect would such a carbon price have on the economy?
A. see below

3. What would be the effect on world GHG emissions?
A. No reduction in world emissions. Andy savings in Australia will be more than made for by higher emissions from oveseas

4. What would be the effect on the climate?
A. None

2. What effect would such a carbon price have on the economy?

First step (determine the limit): assume carbon intensity is inelastic. In that case GDP per capita growth would have to be cut from +1.6% p.a. to -1/7% p.a. average for 8 years (2012 to 2020). That means a very deep, long recession. I’d expect unemployment greater than 20% (like Spain has now). Do we want to turn ourselves into anothe basket case lie Europe?

Second step: consider the elasticity of carbon intensity to GDP.

This is more complicated. The carbon intensity is comprised of two components: Energy Intensity GJ/$ GDP) and Carbon Inetensity kg CO2 / GJ).

1. Energy intensity – is decreasing at around 0.5% to 1%p.a. How much faster can it be reduced? One solution is to force the energy intensity industries to shut down (the growth is coming from the mining and LNG industries – so should we shut them down?)

2. Carbon Intensity – how much can we change that in just 8 years? Without nuclear as an option, how much can we do? We need to cut emissions by 160 Mt/a. Where are the cuts going to come from?

I’ve looked at this and can’t see how we can cut much, realistically, in 8 years without a massive recession. That is the one option we have if we want to achieve the unconditional targets.

I’m persuaded, at the moment, it is not practicable to achieve them. The carbon tax is a diversion from biting the bullet on what we really need to do – remove the impediments to low cost nuclear. We need to realise the 2020 targets are not achievable and we need to work on setting the policies that will give us the greatest cuts fastest. That means getting rid of the ban on nuclear.

We are doing so much wrong it is just ridiculous. The carbon price is another example of a long list of really bad policies, such as:

We have 240 pieces of legislation and regulations to cut GHG emissions. Most cost a bundle and do almost nothing, as the Productivity Commission has pointed out.

We changed incandescent lights for poisonous mercury lights in every house (Mercury is a pollutant in EU but not when used in lights – that is an indication of how ridiculous are our regulations).

As of 1 July, no more resistance hot water heaters are allowed to be installed. That’s dumb. It forces us onto gas (and heat pumps in some locations but either way much more expensive than the simple resistance hot water heater). Why I say it is dumb is because once we do get clean, electricity (e.g. from nuclear) then the best thing we can do is to go back to electric hot water instead of gas.

We are doing it all wrong. We should bite the bullet and embrace nuclear.

Now I’d urge the advocates of carbon price to justify their beliefs and support for a carbon price – not just attack these arguments.

Following are some links to articles that may provoke questions about the Prime Minsiters’s launch of the Carbon Pricing scheme today.

Impost ‘ill-timed’ and puts Australia at a disadvantage

THE Australian named as co-chair to President Barack Obama’s newly created committee on manufacturing has a message for the Australian government: the carbon tax is ill-timed and bad for investment.

Darwin-born Andrew Liveris, who runs the $US54 billion ($50bn) Dow Chemical, thinks a price signal on carbon fails to appreciate that fossil fuels will continue to be the dominant source of energy and suggests the government needs to appreciate the problem more holistically.

“I think it’s not well timed.

“The problem with carbon pricing in isolation is that Australia will be on its own in doing this and it may end up becoming a very difficult place for people to come and invest in.

The Gillard government has gone to vast and expensive lengths to convince the people of what is essentially a fiction: that the rest of the world is taking action on greenhouse gas emissions commensurate with that which Australia would take if it introduced the biggest carbon tax in the world.

As all the legal international frameworks for carbon pricing agreements have collapsed, the Gillard government has had to resort to taking the vague aspirational ambitions of nations as if they were concrete, settled policy.

…

This begs the question: if all the big resource-producing countries that compete with Australia are not going down a carbon tax route, and if the US and Canada are not going down a carbon price route, how can it be that a carbon price would not put all Australian industry at a significant competitive disadvantage?

Windsor has made one big contribution on carbon tax: getting the Productivity Commission to look into international practices. This is the only disinterested research carried out by a credible institution we’ve got. It shows Australia is already doing as much as other comparable nations to reduce carbon emissions and that if we adopt the biggest carbon tax in the world – nearly $12 billion at $26 a tonne – we will be doing vastly more.

The last report by Ross Garnaut was astoundingly poor, relying on various sleights of hand, misrepresentations and propaganda techniques. Garnaut has now sacrificed his reputation as a serious policy intellectual and will be remembered for having produced a shoddy report in the interests of partisan campaigning.

Among the contradictions in his report are its wilful misrepresentation of what the rest of the world is doing, its claim that direct action, as opposed to a carbon tax, would be bad policy for Australia, but the vague direct-action plans of all other nations must be taken as wholly successful, and finally its binary choice between imposing a carbon tax or suffering the horrors of climate change.

This is utterly dishonest because whatever Australia does will have an impact on the global environment so tiny it will be unmeasurable.

No. Do not rephrase my four questions to ones you want to ask. We can deal with your questions after mine have been answered. I’ve been asking them for over a year and they have continually been avoided. I mean answer them quantitatively, and appropriate substatntiation.

There is a reason for my four questions. They follow from one to another. they are the questions that must be asked and answered before we should make a massive investment and risk seriolusly damaging the economy (and all the human damage that does).

Thanks for the question. The chief environmental benefit is the avoidance of AGW; a secondary (though very real) benefit is the reduction of coal’s other environment costs from mercury, SO2 and so on. (Google: coal’s hidden costs top $345 billion in U.S..) We would all be beneficiaries.

I like Robert Lawrence’s two questions, which I might rephrase as follows:

1. Is AGW likely a threat?

2. According to economic theory, what is the best way to reduce emissions?

I just got an email from Bob Brown with a summary of the negotiated package: $10 Billion to be invested in renewable energy! This raises another few questions?

1. How many nuclear power plants could be built with $10 Billion?
2. How much sooner would we reach the 80% cut in Australia’s emissions than 2050 if we stared now?
3. Is there anything in this plan about stopping the export of coal overseas?

RL there was a great deal of wishful thinking from Gillard and Brown in their separate press conferences. Both referred to the UK’s target of 80% GHG reductions by 2050 but skipped over the fact that was predicated on a huge new nuclear build.

Not only G&B but Tony Windsor waxed lyrical about renewables. He mentioned Moree and Chinchilla solar being ready by 2015, about 70 MW average capacity. Geez if that’s closing in on 80% of 56,000 MW my maths is crook.

Combet and Bandt were guarded on the 2,000 MW brown coal buyout. It will be put to tender they reckon with cost criteria kept under wraps. Brown mentioned Hazelwood but earlier media have cited the 240 MW Playford and the 2,200 MW Loy Yang for partial replacement. Whoops I forgot we’ll have 70 MW of solar by then so we should be OK.

I agree it’s kind of pointless trying to knock 100 Mt off our emissions when exported coal and LNG generate over 600 Mt.

I have tried to assist the cause by responding on Facebook to threads on the ABC site (and others including SBS) about the carbon tax and related issues, and I put a link to Brave New Climate’s web site. I also add some basic info about Gen IV. Does anyone else think this is a good idea?

Tony Abbott nearly committed heresy by suggesting on ABC that renewables may not be enough to power a mixed industrial economy. Steady there. He also questioned the veracity of post-2015 ‘international offsets’ which will be allowed if interim emissions targets are not met. Since I don’t foresee major emissions cuts due to carbon tax I think this will be an explosive issue in 2015.

I wonder if the role of the renewables agency ARENA will be to hand out capital assistance in lieu of RECs, FiT and other per-Mwh subsidies. Details are sketchy. They’ve taken it out of the hands of Martin Ferguson who has said unkind things about geothermal. We don’t want realists running the show. The principle of upfront cash is behind the ‘solar flagships’ and the 2000 MW brown coal to gas changeover. $10 bn won’t go far which is why I suspect the government will have a relapse and go back to RECs.

For someone who thinks Australian and world emissions must decrease this is maddening. We’ve got another year to speculate on the likely effects of the carbon tax yet we really won’t know until it happens. If it ultimately disappoints it will have been another year of inaction.

I am as you know, a supporter of the consensus at this place on nuclear power as foundational to low-cost industrial-scale abatement. In a more rational world than this one, Australians would unemotionally evaluate the options and accept that at least for the foreseeable future, both the world and Australia should roll out nuclear power at the expense of coal as quickly as possible.

That’s not going to happen though because the misgivings in this country that already existed and were frustrating progress pre-Fukushima have been given a shot in the arm by that event. It is useful for us to point out why this is the wrong response, but in practice, it is not going to change a lot of sentiment quickly, and certainly not enough for us even to recover the status quo ante. Now, Fukushima will be adduced alongside Chernobyl every time the matter arises.

What we have to do is to stop the matter being argued out in the venue of FUD. We need to make this as much as possible a question of the calculus of reason. Right now, as with Chernobyl, people are feeling fragile and emotional. Few want to trivialise the suffering there and so unpicking the part of the suffering that has to do with the tsunami and the plant’s failure is in practice very hard.

Those of us who aren’t just sloganeers, but who really want decisive action on climate change need to think what, in this context, are reasonable goals. How can we get people thinking calmly and rationally about the energy mix?

We need an “IPCC” of Energy infrastructure. It needs to be reporting every 3-6 months so that it reamins relevant and topical. It’s not going to change the political context in 1-3 years, but as its reports build an impressive body of evaluation and critique and intersect the failure ogf renewables to meet good cost abatement or scale of abatement performance, Fukushima recedes, and the urgency of climate change increases, the presence of such a body will be invaluable.

Those of us who have been arguing abatement seriously have spent much of the last 20 years asserting the primacy of scientific and evidence-based pblic policy, and it will scarcely be politically possible for those favouring renewables to resist a call for a technologically-neutral and independent “Australian Energy Infrastructure Commission” (or something with an even more impressive title). Yet such a commission, if properly staffed, would have shown by 2020 that the case for nuclear power was sound. Given that we are not going to be getting or even starting any nuclear plants before then, this is no loss in practice.

In the interim, exchanging gas for coal plants can get us about 10% of the way there at a modest premium, which is a lot more than the current 5% (166mtCo2e). And each time the renewabilists complain about lack of ambition, we will have an independent report to which we can point them.

MODERATOR
Prof Brook’s latest directive as of yesterday:
This is a website for people who are concerned about climate change, first and foremost. It is not set up to pander to any other subset, and if you don’t care about solving climate change (or at the very least if you’re not neutral on the matter), then BNC is not the website for you. If you are pro-nuclear but consider climate change to be some alarmist conspiracy, then you are welcome to frequent other energy blogs that are populated by denialists – there are plenty of them. Go ahead, it’s a free internet. Otherwise, stay, enjoy, contribute, and follow the commenting rules.

Click on the link to read the edited version. Here is the original I submitted (cut down for space reasons):

As a scientist who researches the impacts of climate change on biodiversity and other natural systems, I see an existential threat posed by global warming to our planetary boundaries. As the dominant species on this planet, we have no choice but to face up to this problem, and solve it, fully.

Will a carbon tax in Australia do this? Of course not – it is but a small piece in a very large puzzle. So why should we commit to this, and why should Australia move ahead of most of the world?

Greenhouse gas emissions from fossil fuels are a tragedy of the commons. If most nations ‘wait and see’, the commons – our atmosphere and biosphere – will be degraded, to the detriment of all people.

Without a price on carbon dioxide emissions, Australia will keep burning coal for its electricity. With an abundant and cheap supply, there is no reason to do anything else. To decide not to do this, there must be an economic justification – a trigger for change. That is what the carbon price is.

At $23 per tonne of carbon dioxide, however, little will be immediately different. Coal will still probably be the cheapest option. So the price must rise over time – or else the carbon tax will fail to deliver.

A rising tax makes the debate about the initial price a sideshow, because businesses will plan for the future, not just for the now. A rising price with scheduled minimum gateways will make a real difference to the medium- and long-term choices being made by investors (government and private sector).

Households should be compensated, because they currently have few options other than to buy what is offered. To fix this lack of choice, the energy market must also be opened to real competition. Renewables, nuclear, fossil fuels with carbon-capture-and-storage – all must be allowed to compete on a fair and level playing field. Other technology specific subsidies should be eliminated.

If we try to pick winners and ban competitors (nuclear), as we are currently doing, we risk high costs, few gains and lost time. As a nation and a leader, this is not something we can afford to get wrong.

(there are also comments from Tim Flannery and Peter Vaughan (Business SA).

For those BNC readers in Australia, I’ll be appearing with comments on the ABC 7:30 Report tonight.

If most nations ‘wait and see’, the commons – our atmosphere and biosphere – will be degraded, to the detriment of all people

I doubt the richest 10-20 million will suffer any net detriment from biospheric degradation. They are those on the positive side of embezzling the commons.

Also, it’s the perceived effective price that must rise over time. As tempting as it is to simplify that to the explicit price the commodity markets tell us that business can weigh a range of factors in their investment decisions. If they think the regulatory burden or any other factor predisposing usage of fossil HC will begin to move against it by making it more costly in their hands, they will move regardless of the explicit price at the time. This is one of the reasons for having an ETS, since it invites businesses to guess where prices are going over 20 or 30 years, using the cap as a guide.

This is also why yesterday’s scheme is not properly speaking, a tax. Tradeable securities in emission are created. You don’t get that from taxes. I can’t trade my fuel excise with anyone and I don’t get a service in exchange for payment either.

If you folks really believed that reducing carbon emissions was important, you would advocate an end to coal mining in Australia. This would reduce domestic emissions and also emissions from the countries that buy your coal. Tinkering with carbon taxes is an empty gesture.

GC: I’ll be sorry to see you go, you’ve contributed some interesting stuff (and have generally restrained yourself regarding climate change, despite your obvious disagreement).
And there are those of us who *do* want to see a phase-out of coal mining in Australia. We’re realistic enough to understand that it will take a long time to achieve, though, given the $billions in tax revenue it brings. Personally, I think it’ll happen a lot faster than we all think, once the impacts of climate change start becoming really obvious.

Peter Lang: from your comment upthread, where you outline your assessment of the economics of a carbon price:

First step (determine the limit): assume carbon intensity is inelastic.

The energy savings identified through this program are equal to 2.9 per cent of Australian energy end use.

That’s a substantial energy saving. Given Australia’s high carbon intensity for energy, that probably translates to at least a 2.5% reduction in carbon emissions. At the same time as GDP is maintained, or increased (what happens with the money that is no longer being spent on wasted energy? Surely it doesn’t just vanish into a vacuum…)

If you folks really believed that reducing carbon emissions was important, you would advocate an end to coal mining in Australia. This would reduce domestic emissions and also emissions from the countries that buy your coal. Tinkering with carbon taxes is an empty gesture

That’s true of course (though those buying Australian coal could replace it by buying elsewhere or rampoing up use of domestic supplies, which uncertain net effects on world emissions). The problem here is that such a program (if conducted on a very short timeline) would not be politically viable, and while it would sharply reduce Australian-sourced emissions, it would do so at a much higher cost than other programs that could be run to reduce emissions by the same scale. Nuclear energy is one such alternative option.

Advocacy of this point is intended to force proponents of mitigation to choose between appearing disingenuous or wild-eyed gaia-firsters. This is a political wedge tactic. That we don’t advocate such things doesn’t stop opponents claiming that our “real” agenda is precisely that — to shut down coal on a very short timeline.

Your claim also overlooks a much more salient point. At the moment, the developed world relies heavily for its consumer goods on the developing world. Most of the growth in emissions in places like China and India has been a result of western demand. They wouldn’t be burning anywhere near as much coal if we weren’t demanding supplies of cheap computers and TVs or cars or other things. What you ought really to call for is a policy of buying local or not at all. That would cut emissions in practice even more.

Once again though, for obvious reasons, hardly anyone thinks that a good idea. So we are back with the hard and non-sexy work of working out hat low cost industrial scale abatement looks like rather than trying to fix everything with the stroke of a pen.

gallopingcamel, writing on 11 July 2011 at 11:37 pm; and on 10 July 2011 at 9:57 PM,

Sorry to see you go. I understand Prof. Brook’s policy–Peter Lang was gumming up the works pretty badly. And we who are concerned about AGW have many things to discuss, ideally without too many distractions.

But on the other hand, I thought in our short interchange you presented a number of valid points. And valid or not, they are views held by many, if not most, Australians as well as many, if not most, citizens of my country, the U.S.. So we who favor climate protection, nuclear power, and/or a carbon tax had better know how to address these views.

With regards to silly theories I gather you haven’t seen the Samuelson graphs then. What followed required steadfast adherence to theory to deconstruct what was being doctored to look a winner. His main whinge was that interpretations of original theories would be altered to say ‘no he didn’t quite mean…..’ and a real argument based on principles was extremely difficult to prosecute. Not too dissimilar to the current conundrum. At most debates it’s not uncommon to see a Nuclear advocate display a 30 year graph to highlight ratio of C02 output being low, then only for a solar advocate to use very short time scales to highlight upfront capital costs and energy inputs for Nuclear. Neither side really comparing apples but winning claps from their groupies.

So whilst we wait for 2020 (pushed out from 2000) when GDP of the U.S.S.R finally overtakes over the USA, the problem we now face is that all the information made available by Prof. Brook and others still struggles gain traction in the wider community and amongst nouveau environmentalist (you connect the dots) opinion makers the goal posts are simply moved to suit pet arguments. Not too surprising also is that we are presented with predictions that renewables will be cheaper in 15 years, just like we heard in the 70’s that solar breeders were soon to be the way of the future. Therefore if I could spend only a few resources pushing the case they would all be directed towards the ALP Right as the last remaining hope. This is the bastion of trained economists and those most amenable to reasoned analysis of the numbers.MODERATOR
Sean – would you please supply the links/refs to support your information. This is a requirement on all but the Open Threads on BNC. It assists others to follow up and assess what you have written. Thank you.

SD, correct, this reflects the changed nature of the BNC blog (an evolving digital entity), and the limits of my patience in trying too hard to be all things to all people (an impossible and frustrating mission).

So, to be clear, the working context in which BNC is embedded is that climate change is a critical problem to solve. The motivation for the blog (henceforth) is to seek the most effective solutions and discuss the pros/cons. If you are a climate change skeptic (or whatever), you are welcome to comment on the relative veracity of the proposed solutions (or even argue that none of them are suitable, if you can put a coherent case). But this is not the place to debate the whole “Is it? Isn’t it? … happening “space. We’ve moved on from that. If such dialogue entertains you, then there are plenty of other places on the ‘net to engage in this ‘repartee’ to your heart’s content. BNC is now principally a place to discuss the options for moving away from fossil fuels, and when there are posts on climate change, they will be about updates to the science.

Such are the choices that must always be made in such intellectual ventures – what to focus on, and what to put aside? If a certain percentage of the audience is turned away by this policy, then so be it.

Apologies as i’m away from home but the sources for the claims were;
On the Solar Breeder pathway, don’t have exact page number for this:
‘Diesendorf, M (1979). Energy and People: Social implications of different energy futures. Canberra: Society for Social Responsibility in Science (A.C.T.).’

And aside from many books on the subject this one:
Catley, R (2005). The (strange, recent but understandable) rise of liberalism in Australia. Sydney: Macleay Press.
Provides as detailed a description as any of the inner working of the ALP during the Hawke/Keating deregulation era. What’s relevant is that tough decisions were made during internal debate inside the party room as to whether or not to go for ‘economic rationalism’, even though it wasn’t popular with the base, the left and would lead to some greater inequality (Garnaut then had published another report paving the way for engagement with Asia and away from the UK). Of interest because I believe we face a similar challenge and that there is form to suggest that when given the full dossier on the economics of future options, they will chose the best option. Namely, the removal of barriers to Nuclear.

An interesting time for this. A carbon price is finally here in Australia. This is an opportunity to break away from the media-consuming, stale debate over this issue and have a renewed, fresh focus on real energy solutions – without the distractions. The playing field is leveling, but far from level yet.

Drongo you should look at it more as having this site to discuss moves to a progressive baseload power source, rather than worrying about censorship of climate views. Realistically it is not even a change of policy as discussion is meant to be “on topic” and unless “Is AGW real” is the topic then people should not be pushing their skeptical or otherwise viewpoints.

I see this as an effort to focus on the actual technical fixes and realities of providing energy in the future. AGW is a side issue, a blip, a distraction from that main issue.

Lets just all agree that there are people who post here who have different viewpoints on climate science, and move on.

I do note, however, that most of Peter Lang’s comments that annoy some are not actually sceptical of AGW science (although he is), he in fact is just talking about energy, and the benefits or otherwise of a carbon tax.

The “alternative view” has been heard, contemplated and deemed to be bunkum or cant. There’s no need for any rational person to keep repeating that exercise this side of something more impressive than some unqualified ranter repeating an old trope.

Without in anyway endorsing their views on climate change I have learnt a great deal about energy from various climate change skeptics and engagement with their viewpoints has been valuable, when expressed without belligerence. camel, thank you for your gracious farewell.

I agree that, in theory, your plan to depoliticise energy policy by creating an “IPCC of Energy Infrastructure” and an “Australian Energy Infrastructure Commission” sounds appealing. However, careful thought is needed before assuming that such organisations would necessarily give governments the advice that most contributors to this site deem sensible.

I have been dismayed by several so-called expert advisory reports. I seem to recall, for example, that the IPCC has recently reported on clean energy solutions, emphasising reneweables and efficiency with little attention given to nuclear (Lost the source).

In the UK, the government advisory committee on renewables recently informed politicians that the extra costs of intermittency in terms of extra grid connection costs and backup would be relatively trivial even at levels of 80% penetration. Thus, wind (onshore), with LCOE equivalence with nuclear, will seem rational to a government that follows scientific and evidence based policy.. In August 2010,the National Nuclear Laboratory more or less advised the government against pursuit of thorium power. A few years earlier, the Royal Academy of Engineering, though making the case for nuclear, was recommending a far more modest deployment than most here would consider necessary (the subject of an earlier BNC post).

One must conclude, therefore, either that most BNC contributors are delusional about the obvious advantages of nuclear or that many expert committees give incorrect advice. Furthermore, even the nuclear professionals, possibly daunted by lack of progress over the last half century or because many of them derive their incomes from addressing safety and anti-proliferation concerns, appear to offer, at best, lukewarm support for a full blown nuclear renaissance. In particular, this seems to apply to their lack of support or their lack of urgency in wishing to close the nuclear fuel cycle.

Finally, I would like to fly a kite and suggest that nuclear power, though producing almost emissions-free energy can reasonably be seen by politicians (and others) as having more in common with fossil fuels than with renewables in that peak uranium would follow peak oil quite quickly if there were to be a full scale nuclear renaissance. (Yes, I know that uranium won’t run out and that, if the worst comes to the worst, we can go for ocean extraction at a price). It is thus easy to write off nuclear as, at best, a stopgap measure in the fight against global warming. In fact, I strongly suspect that this may reflect official government thinking in the UK. In other words, nuclear is necessary in the interim until such time as the optimum renewable has been identified, the presumption being that such will exist at an affordable price. Unless closed cycle nuclear can be quickly demonstrated at the practical level, I would suggest that nuclear roll out will be too slow and too limited to prevent catastrophic climate change. However, the R&D necessary to accomplish this is unlikely to be spent in liberal democracies with privatised energy markets, substantial debts and ongoing faith in renewable solutions. Given the global nature of climate change, perhaps the greatest good that the UN could achieve would be to coordinate a joint international approach by nuclear capable capable nations with additional financial assistance from nations such as Australia. An alternative would be to leave the Chinese and Indians to it and hope that they would be successful and that the rest of us could afford to buy from them. It is only by closing the fuel cycle that nuclear can be classed as a renewable source of power and this will certainly reduce the potency of the anti-nuclear movement.

The main concern I have with this policy is that in the real world we may be reducing emissions by exporting them to our trade competitors. For example, coal exports taken up by Columbia or Mongolia or Alumina refining to China. If this happens and thousands lose their jobs so the rest of us can feel good about ourselves, but with no nett global gain, then I dont believe it passes any test of equality or sustainability. We are effectively adding a tariff to our exports that isnt imposed on imports from countries without a carbon tax. The impact on exposed industries such as tourism at a time when the dollar is crushingly high is risky. Nevertheless, I think Gillard has made the best of a difficult situation.

Regardless of the strength of the consensus surrounding global warming there is no market based approached for determining the what should or should not be the global response. I would advocate for a temperatures futures market which would set the price for the forward temperature curve. In this way, anyone would be free to hedge their exposure to their perceptions of future global warming. This is already done in the insurance market for hurricanes. By creating a market based pricing system the world would get a much better signal on where the economics really was. As opposed to having the economics set by government edict.

I agree that any independent advisory commission would need to be well-designed/resourced and given a suitable brief to report. It would need expertise in engineering (including of course areas related to nuclear energy), economics & quantity surveying, marketing, and environmental accounting, epidemiology and perhaps even some areas beyond that. It would also need for all of its leading contributors to be at arm’s length from the potential major industry beneficiaries of their advice.

I’d very much like it to operate as a standing commission — able to respond quickly to matters that have caused public disquiet (much as our various Independent Commission Against Corruption in NSW or our ACCC does) or on the other side, public interest. If the latest fad is vanadium flow batteries to firm wind, or molten salt to firm solar thermal — then let us have someone who can quickly decalre on the efficacy of these proposals. If someone says that plug-in electrical vehciles being used to load balance during peak usage makes sense, then again, I’d like someone with authority to do the work and report back within 3 months, and not have to have the government refer it. If someone says somthing troubling about uranium mining in the Northern Territory, then again, let’s see if it is genuine or simply FUD and let’s find that out early before it becomes the latest talking point. Let them decide on what is worth reporting on. A commission that responds in this way will rapidly become the starting point for good information in the public mind.

I agree that nuclear power can itself be seen as a finite resource, but again, this is where a body such as I have proposed can make sense. It is clear that at least in the short to medium term, there will be a lot of “once-used” fuel emerging from existing nuclear reactors and reactors that are still in the process of being commissioned. By 2035 it seems likely that at least in some parts of the world, we will begin to see a substantial roll out of GenIV reactors that will begin to be able to consume the output of the older reactors and also, draw upon thorium and new sources of uranium. Bodies like the “AEIC” could illustrate these timelines mapping out the path to sustainability,showing that in practice, we have thousands of years worth of energy supplies, this side of a breakthrough on fusion other renewables.

The main concern I have with this policy is that in the real world we may be reducing emissions by exporting them to our trade competitors.

This is an old trope.

For example, coal exports taken up by Columbia or Mongolia or Alumina refining to China.

Nobody has done a single thing to predispose a singe extra ton of substitution of Australian coal to anywhere. In fact, something like $1.3bn worth of support for coal has been proposed, precisely so they can keep operating their gassier mines. It’s also not that easy to import substitute, because price is not the only factor. Qualit(ies) of coal, security of supply, cost of transport, relative currency values are all factors. In the wake of this announcement, substantial new investments in coal mining have been announced, which gives the lie to the scare.

The reality is though that in a global trading system, it really matters very little where goods are produced. What is most important is that they be produced in adequate volume and quality at a price in labour that is acceptable to most who need the goods and can pay for them with some equivalent labour. Before an Australian can buy a good in some other place he or she must have something of equivalent value to trade. The currency is a mere proxy for this value and it would be of little use for any other jurisdiction to produce goods that were in practice unsaleable. A system in which goods are produced where they are produced at the best quality and lowest cost and traded everywhere they are in demand for similarly produced goods is one in which everyone wins. Today, we are including “low ecological footprint” in that quality because we know that producing goods with reckless disregard for the environment imposes costs on the bulk of humanity, and in the long run prejudices productivity.

The fact of the matter is that Australia produces some of the dirtiest aluminium in the world. If it were to be produced elsewhere, it would almost certainly be produced more cleanly. Not only that, but Australian consumers are radically subsidising local production. We could sack every person in smelting aluminium here, pay them $70,000 a year for life, cut emissions (not just of GHGs but toxics too) and still have plenty of change. We aren’t going to do that, but in the unlikely event that the aluminium business upped sticks and left, it would not be a disaster for us.

Threats by metals industries to relocate may be somewhat hollow. Several analysts conclude China’s coal production is peaking now but this week’s Oil Drum gives 2027 as the peak. The new Mongolian coking coal deposits only provide a few years supply at current Chinese consumption. The southern coast of China is better served by coal from elsewhere. It is a strange situation whereby Asia gets iron ore from WA and coking coal from NSW or Qld. They mostly provide the cheap labour and lack of pollution control. That’s why we should carbon tax fossil fuel exports and let them ask for the money back. China and India should not get a free ride on Australia’s carbon restraint when we supply their carbon.

On aluminium I could point to Tasmania’s Bell Bay smelter. They claim to be largely hydro powered when it suits them but they are located not far from two gas fired power plants and the converter for the HVDC cable that brings brown coal power from Victoria. The electricity discount they receive is said to be worth $133,000 per employee. Well if they are truly hydro powered they’ve got nothing to fear from carbon tax. It’s all to do with the ‘pool price’ they reckon. Of course we could always do with less e.g. 20c refundable deposits on soft drink cans.

Thank you franbarlow for not gloating. With regard to the idea of leaving the coal in the ground, we are doing something similar in the USA by refusing to drill in ANWR and many offshore locations including Florida. This is not as crazy as it sounds because we are passing these resources on to our children who will find better uses for them than we have.

This is still the best site covering energy issues and if I manage to gain access to any more Florida Power & Light generating plants the reports will be offered to Barry first.

A point of clarification, when you get a chance: Which of these two statements more accurately reflects current BNC policy?

From 11 July 2011 at 8:54 AM, and the official comments policy statement:

“…if you don’t care about solving climate change (or at the very least if you’re not neutral on the matter) then BNC is not the website for you.”

Or from 11 July 2011 at 2:54 PM:

“If you are a climate skeptic (or whatever), you are welcome to comment on the relative veracity of the proposed solutions….”

Thanks.MODERATOR
The following statement from the BNC Comments Policy applies:

This is a website for people who are concerned about climate change, first and foremost. It is not set up to pander to any other subset, and if you don’t care about solving climate change (or at the very least if you’re not neutral on the matter), then BNC is not the website for you. If you are pro-nuclear but consider climate change to be some alarmist conspiracy, then you are welcome to frequent other energy blogs that are populated by denialists – there are plenty of them. Go ahead, it’s a free internet. Otherwise, stay, enjoy, contribute, and follow the commenting rules.

Basically no comments sceptical of the consensus science on climate change will henceforth be posted or discussed on BNC. It is up to you to decide if you can comply with this new policy. Your climate change scepticism remains your business. If you accept that limitation you are welcome to comment on proposed energy solutions discussed on BNC.
The following statement by Barry in reply to a similar question by Spangled Drongo may also help to clear up BNC’s new position for you and others reading this.

This (new policy) reflects the changed nature of the BNC blog (an evolving digital entity), and the limits of my patience in trying too hard to be all things to all people (an impossible and frustrating mission).

So, to be clear, the working context in which BNC is embedded is that climate change is a critical problem to solve. The motivation for the blog (henceforth) is to seek the most effective solutions and discuss the pros/cons. If you are a climate change skeptic (or whatever), you are welcome to comment on the relative veracity of the proposed solutions (or even argue that none of them are suitable, if you can put a coherent case). But this is not the place to debate the whole “Is it? Isn’t it? … happening “space. We’ve moved on from that. If such dialogue entertains you, then there are plenty of other places on the ‘net to engage in this ‘repartee’ to your heart’s content. BNC is now principally a place to discuss the options for moving away from fossil fuels, and when there are posts on climate change, they will be about updates to the science.

Such are the choices that must always be made in such intellectual ventures – what to focus on, and what to put aside? If a certain percentage of the audience is turned away by this policy, then so be it.

In response to Franbarlow, my initial post was as much a question but your response is somewhat simplistic. It is a fact now that we operate in a global, competitive cut throat market. I hope you are right. For those in cosy public sector or non exposed industries who blindly support the tax and aggressively shoot down anyone who expresses concern, I hope you spare a thought for those who do lose their jobs or small businesses and thank them for giving you the chance to feel warm and fuzzy while the rest of the world continues to pollute.

Thank you so much for giving such a thoughtful answer, and for quoting the full texts so that people can easily compare them. BNC’s position is nuanced: firm but quite reasonable. And, really, it excludes almost no one, provided they play by the rules and advance the search for cost-effective ways to cut CO2.

The fate of our atmosphere will depend on pioneer countries that are willing to lead by example and to form sub-global alliances. For instance, Germany has now embarked on a steep road towards complete decarbonisation of its economy
by 2050

and later

At the same time, there need to be parallel developments promoting renewable energy and energy efficiency. Australia is bathing in free sunshine.

On Germany, we’ll see – a grand experiment is underway. As for the ‘free sunshine’ comment, it’s hard to fathom that someone of his caliber in climate science and policy advice could say such a thing.

I think there are many people who would accept the principle that mankind has an influence on the environment in general.
(Deleted – violation of BNC comments policy)
I personally would be happy to accept that mankind may be having a slight effect on the climate. I also think we should wean ourselves off fossil fuels because they are pretty much finite and should be left as much as possible to our children for chemical feedstock. Another reason is political, I think it is unacceptable that we are hostage to certain regimes in the Middle East and elsewhere.
(Deleted violation of BNC comments policy)
I want to see Gen IV nuclear started in Australia- up until now no-one in the Government is advocating this.MODERATOR
Please read BNC Comments Policy on the “About” page before posting again. Violations of the policy will be edited or your comment may be deleted in entirety.

For those who haven’t picked up on it yet, according to page 24 of the main report, Australia’s actual emissions will continue to rise until the late 2020s, before falling and reaching current levels again around 2040 – most of the claimed reductions will come from overseas offsets (paying landholders in New Guinea not to chop down trees). The theoretical 5% reduction on 2000 levels by 2020 will come mostly from these offsets.

The Greens sought, and secured, tighter requirements for international permits under the current package than under the CPRS. Under the package, Kyoto-compliant permits from nuclear power and large-scale hydro-electric outside EU guidelines won’t be permitted…

Has there ever been a clearer demonstration that the fossil greens are motivated not by saving the climate, but ideology? Fran Barlow, I realise it’s a shot in your locker you can only fire once, but is it time to start drafting that resignation letter?

For those in cosy public sector or non exposed industries who blindly support the tax and aggressively shoot down anyone who expresses concern, I hope you spare a thought for those who do lose their jobs or small businesses and thank them for giving you the chance to feel warm and fuzzy while the rest of the world continues to pollute.

A couple of points.

First, the public sector is not so cosy (I do not work in the public sector). Under Abbott’s policy – as enunciated by Hockey – the Direct Action policy of investing some $4 billion will be funded by “reducing waste in the public service” i.e. sacking public servants. $4 billion worth of public servant wages means tens of thousands of people unemployed and hundreds of thousands of associated family members losing the household income.

You may not be sympathetic to this, but I hope you would be and, in turn, not be so simplistic about who’s cosy.

Secondly, it is terribly sad that people will lose their jobs during the transition from the fossil fuel economy. I support every endeavour to manage this transition to minimise hurt. But it’s going to happen. I was trashed when manufacturing industry imploded in 1983.

Now, if the politics of addressing climate change hadn’t been so hamstrung by the “do nothings” of the world and the short-term vested capital interests over the last two decades the transition would not have to be as disruptive. “Buggy whip” industries would have had 20 more years to “adapt” to the inevitable structural changes.

Don’t blame the carbon tax supporters now … blame the do-nothings these last 20 years.

By the way, the present job of transitioning from the fossil-fuel economy is also being derailed by what will be a protracted global debt crisis … the result of uber-capitalists fostering debt-financed over consumption amongst the “aspirational” class. Blame them too.

Proponents of the introduction of a national carbon tax seem to gloss over the complexity of international trade. You can’t solve imbalances and the competitive disadvantage you gain by simply introducing a carbon tariff on goods imported from countries which do not have such a tax. This ignores that there are more than two players in the game. Some countries are net importers. Other countries are net exporters, their economy is built on manufacturing goods and selling them abroad. Germany, for example, sells a lot of high tech machinery to China. If it would introduce a carbon tax, its products would become more expensive. German producers in energy intensive branches of the economy would respond by moving factories to “carbon tax havens”, where energy is cheaper and China would start buying, say, more of the cheaper Japanese high tech machinery instead, because Japan has not introduced the tax. This would lead to a reduction of emissions in Germany, but not in a way intended by carbon tax advocates.

An introduction of a carbon tax has to be a coordinated international effort. Sadly, that is in all likelihood, not going to happen.

“The fact of the matter is that Australia produces some of the dirtiest aluminium in the world. If it were to be produced elsewhere, it would almost certainly be produced more cleanly.”

It’s not the fault of the aluminium industry that the electricity grid is so dirty. It takes a certain number of watt-hours to reduce a tonne of aluminium… and that is what it is, anywhere in the world.

Aluminium is not a problem… coal-fired generation is.

If we could change the fundamental chemistry of alumina electrolysis to reduce its energy demands, we would, but the laws of physics and chemistry don’t work that way. That’s the price we pay for such a useful, valuable metal.

I agree with your broad sentiment Alan, but my specific fear is that the pain will be for no nett gain if the tax is not commensurate with our trading partners and competitors. My concern it is a political fix rather than a well thought out strategy. If the tax fails politically, and is seen by the public as job destroying, you will ensure Abbott wins government, and the policy failure will set carbon pricing back 10 years. Like the mining tax fiasco, this has been rushed. I believe that the right approach would have been to incorporate carbon pricing as part of a genuine fundamental reform of the taxation system, particularly business tax. Secondly, we need to think clearly about a long term energy policy and strategy. I think targets are fine but are meaningless without hardheaded planning of how to get there. A Tax and motherhood statements about renewables won’t do it. All of this takes leadership from government and opposition. It also requires some level of responsibility from advocacy groups.

It’s not the fault of the aluminium industry that the electricity grid is so dirty. It takes a certain number of watt-hours to reduce a tonne of aluminium… and that is what it is, anywhere in the world. Aluminium is not a problem… coal-fired generation is

Well yes, obviously. I was merely making the points that

a) if aluminium were produced anywhere else it would probably be cleaner
b) we’d be relieved of a massive cross subsidy AND the associated pollution (not just CO2)

Iceland produces very clean aluminium because it has a a stationary energy system relying almost entirely on hydro and geothermal.

Of course the massive losses and risks associated with going some place else utterly dwarf the imposts we migh impose as a consequence of carbon pricing so the prospect of smelting going offshore as a result are for all practical purposes, zero.

Aluminum ingot takes 15 kwh electrical input per kg according to Wiki. A tonne produced using black coal fired electricity would therefore attract 15t X $23 = $345 carbon tax. Seems they won’t have to pay it fully because they’re iconic or trade exposed or some other kind of sacred cow.

I understand the aluminium recycling fraction is about 1/3. That should increase to 2/3. The industry is like a 7-seat V8 SUV. Do we really need it?

Has there ever been a clearer demonstration that the fossil greens are motivated not by saving the climate, but ideology? Fran Barlow, I realise it’s a shot in your locker you can only fire once, but is it time to start drafting that resignation letter?

Let’s consider the problem by asking some salient questions.

1. Why have The Greens adopted this policy?
2. Under what circumstances might we depart from it?
3. Would the departure from The Greens of those who object to this policy but support the party in almost every other respect advance either good public policy or reason on matters related to nuclear energy?
4. Does this policy entail a fundamental breach of any ethical principle for a Green?
5. Under what circumstances could the policy be amended by the Australian government?

Answers

1. It’s a logical consequence of our policy to oppose nuclear energy. It would have been absurd for us to have acted otherwise without reversing this policy. Our leaders could have turned a blind eye, but again, the question would arise — why?

2. Plainly, only if we rescinded so much of our policy as excluded resort to nuclear power. That would require a very substantial policy debate on the matter within the party, followed by a positive resolution and at this stage there is still no appetite within the party for such a thing. Such “appetite” as there was declined post-Fukushima. Pre-Fukushima, it was my estimation that perhaps about 5-15% of the party were open to the kind discussion of the merits of the policy.
that would not become heated and nasty. Now, I’d be surprised if it were anything like that.
3. Plainly not. The departure of those of us who would like a reasoned discussion on this matter would make a change of policy appreciably less likely, and also weaken the one political party represented in the parliaments of this country consitently standing up for equity, human rights and the environment more generally. Public policy would suffer without any corresponding benefit.
4. Of course not. The Greens are the same party today that they were when we all joined. If our party had done something both wrong and utterly at odds with our stated values and there was no reasonable prospect of overturning it I would leave, but I daresay I’d not be the only one, for it would mean that our party had become something else entirely, and then our departure would be in favour of building a new and more ethically coherent organisation rather than a simple protest against policy perfidy.
5. The things that count as credits under the system can be amended by regulation by a future government. They don’t require legislation. As The Greens are unlikely to bring down the regime over such a matter, the regime could, if it wished, allow such credits without our endorsement.

So no, I won’t be leaving The Greens over this and don’t imagine anyone else will either. I will continue to work loyally within the party to advance its standing and influence while continuing to encourage my colleagues to reconsider their view of the role nuclear power can play in decarbonising the world’s economy.

I might add that as a matter of policy, it’s not clear that allowing such credits is useful in abatement. While one could argue that allowing them for prospective plants retiring existing fossil hydrocarbon capacity would be useful, allowing them for existing capacity can only subvert the price signal wanted.

Rick … we may well be in violent agreement at the principle level. At the implementation level, we may differ on many fronts related to “how we would go about it if conditions were far-from-perfect” … like now.

my specific fear is that the pain will be for no nett gain if the tax is not commensurate with our trading partners and competitors

A legitimate concern. However, it is most likely that countries will move somewhat independently in both timing and nature … I have given up on a unified, all together global response. Should we wait to see what our trading partners do? Are they waiting for their trading partners to move? How long do we wait?

Several of our trading partners are already moving and the importance of building in “international linkages” will be critical. The future context will be fluid but, like the old tariff considerations, I believe the carbon price parity will be reasonable.

It is also likely that the “terms of trade” volatility will continue to be more influenced by forex changes than a carbon price which, even for a carbon intensive economy like ours, will be relatively small and very stable/predictable.

it is a political fix rather than a well thought out strategy

The strategy is pretty simple and been around for yonks – price carbon while busting a gut to get a critical mass of developed countries to do likewise and have a reasonable mechanism to trade carbon. The climate science and economics advice to government has been pretty consistent and adequate for years. I don’t see Garnault jumping up shouting “No! You’ve stuffed it!”

With Europe, China and India and a number of US states doing something now I’m happy for us to jump into the pond. Sometimes it is necessary to bite the bullet rather than waiting and waiting for all the ducks to line up.

think clearly about a long term energy policy and strategy. I think targets are fine but are meaningless without hardheaded planning of how to get there

I agree. This is a mess. Lots of uncertainty.

The key, interdependent issues for me are (i) what is the timeline for retiring the fossil fuel power stations (I think 30-40 years in total but what’s the profile over the next 10-15 years?); and (ii) given this profile and our energy demand changes, what energy solutions fill the gap.

I worry that the “renewables are good” meme is so pervasive that people will not examine the detail. I worry that the “nuclear is bad” meme is so pervasive that people will not examine the detail. I worry that there is a lot of uncertainty about the capability of both sets of solutions and it will take a lot of time and money to reduce that uncertainty below the natural risk tolerance of the community (i.e. when not backed into a corner)

So I am not uncomfortable that we have acted. This will force R&D and commercialisation and retirement of coal power plants. This will force “reality” so long as we make sure there is good governance around major decisions. And that is a key challenge … how to assure sound decisions whatever the residual risk profile.

this takes leadership from government and opposition. It also requires some level of responsibility from advocacy groups

Yeah, well … it is what it is and it is ugly. Barry Jones wrote a fantastic article a couple of weeks ago about political “conviction”.
The government lacks conviction because it has stuffed up a lot of programs, the GFC derailed consumer confidence and the crazy media facilitated FUD about climate change. Enter an Opposition which, less than 2 years after being decimated at the polls, regathered themselves and are pushing with extreme conviction.

Advocacy groups – be they left or right(pejoratives deleted) – can be expected to act with extreme conviction but questionable sense and responsibility.

What has to change? What will cut through?

IMO there needs to be a resolution on the carbon tax … either it comes to pass and does some good and the world doesn’t end and Abbott is left a loser; or things blow up and Abbott is the winner.
Whichever ways it pans out it will be decisive and give the victor space to settle down. Whether ‘sense’ and ‘responsibility’ return is another question but I wouldn’t expect to see them back until ‘reality’ and ‘perception’ collide.

Middle-of-the-road advocacy groups just have to keep battling on.

The wildcards are the media and the global debt crisis. The media and politics are a positive feedback pair. They go crazy together and they go sane together. If the global debt crisis keeps on keeping on, the US and some EU countries will be brought to their knees … the US will fall to the rabid right come November 2012 … the media circus continues … sense and responsibility continue to be sacrificed … yuck.

I think we’re headed for a renewables reality check long before 2020, more like 2013 I’d say. The figure bandied about for an annual emissions cut between 2011 and 2020 is 166 Mt. I can’t recall how that was derived but since emissions were about 500 Mt in 2000 and they are now about 580 Mt I think we need to cut at least 580-480 = 100 Mt.

Incidentally since emissions from exported coal 260 Mt and LNG 20+ Mt would exceed 600 Mt I wonder if we’ve taken our eye off the ball.

Anyways 100 Mt over 11 years is 9 Mt annual reduction, ie 580, 569, 558… We might do that for a year or two then it will get progressively harder without a recession. It looks like the Equatorial Guineans will have to suck up that CO2 for us. It is kind of them not to chop down their forests for the time being until we can send them a few dollars.

Reading the clean energy paper linked upthread I see there is lot of talk about wildlife corridors and indigenous participation. It seems to gloss over the nuts and bolts issues like what happens if we don’t meet the target. The plan lacks both realism and any sense of urgency.

A carbon tax can be fairly simple. Here’s what I’d advocate for the US, where I live.

1. Have reasonable targets, say $15 by 2015, and $20 by 2020. These amounts approximately equal the floor price of Australia’s proposed ETS.

2. Ramp up gradually to the $15 price. See Barry Brook’s comment above on 7 July 2011 at 10:04 AM.

3. Return to the public all of the tax revenue coming from the public. James Hansen recommends doing this through a “green dividend”; British Columbia has done it via lowered personal income taxes.

4. Return to companies all of the tax revenue coming from companies. This should be done by lowering the company (income) tax; such a tax swap would limit damage to the economy.

Because this simple carbon tax would do little harm to the economy, and quite possibly might help it, the plan should be relatively appealing to people across the political spectrum, whatever their views about climate change.

Huon I thought you might have come from Huonville
around these parts. It would be a good test of EV commuting while only 40km from the capital Hobart there are two steep hill climbs over old glacial valleys.

What Hansen calls ‘fee and dividend’ we call ‘revenue neutral’. The idea in Australia is that companies are price setters and pass on carbon costs to consumers. The consumers get compensating tax cuts and welfare increases from the carbon tax revenue. Some high emitting industries get other help eg replacing coal fired power stations with gas. Some corporate help is thought to be too generous and is disguised protectionism eg the steel industry. I think the carbon tax is a step in the right direction but on it’s own it won’t deliver the required CO2 cuts.

If my reading of the specs is correct, it can cruise at 30 mph using 50 watts of power. That means by replacing one lightbulb in your house you’d have the equivalent of a oil well in your backyard, supplying you with a lifetime of free petrol. Well, I exaggerate a bit, but it’s still pretty amazing.MODERAOTOR
Second part of your comment is off topic. Please continue with that on the Open Thread.

The hardships endured by the Huon piners was legendary. Only a couple of them (people not trees) still survive.

The ceramic fuel cell has been known for a while but to I think to capture the CO2 it would need concentrated oxygen intake not air. Otherwise you get N2 and NOx in the exhaust gas. The auxiliary loss of a PSA oxygen concentrator would lower the EROEI as would the post-combustion CO2 capture. A CSIRO solid oxide fuel cell ran at 800C if I recall so is unsuitable for vehicles. What happens to this technology when natural gas runs out?

If they could solve the seepage problem in methanol fuel cells that could be a massive breakthrough. Alas little progress.MODERATOR
Veering off topic. Please continue on the Open Thread.

In the absence of further policy action, strong growth in emissions is projected between now and 2020. This is primarily the result of strong demand for Australia’s energy exports, in particular, coal and liquefied natural gas. Emissions are projected to reach 690 Mt CO-e in 2020, or 24 per cent above 2000 levels…Based on these projections, Australia requires additional abatement of between 160 Mt CO-e and 272 Mt CO-e in 2020, depending on the target.

In other words, to achieve the 5% 2020 target on 2000 levels would require the equivalent of shutting down Hazelwood (1600 MW) ten times, or planting new forests equivalent to four times the area of Tasmania by 2020, etc..

GP thanks for the info. I presume export related emissions cover such things as gas burnt within the Australian maritime zone to drive LNG trains. I believe these operators want to be exempted from carbon tax because they are some kind of economic saviour. If exported gas and coal was carbon taxed then the question wouldn’t arise.

I thought Australian steelmakers (OneSteel and Bluescope) would complain that foreign rivals didn’t have to pay c.t. on emissions from the same coking coal. The government sidestepped this problem by overcompensating the local industry.

Australia is the only developed country intending to rely on reduced deforestation emissions as the primary way of meeting its quantified emission reduction target under the Kyoto Protocol. Australia’s approach to deforestation issues under the Protocol highlights the types of issues that a REDD-plus scheme might encounter in the future.

Perhaps REDD will one day be seen as on the great scams of the early 21st century? But what else is the government supposed to do when the left forces it to adopt impossible targets? Try to educate the public on the scale of the challenge when lots of people believe all we need to do is install a few more solar panels and change our light globes?

The European Union emissions trading scheme doesn’t recognise carbonsink offsets such as afforestation because it believes they are not permanent. However they rely on the even dodgier ‘clean development’ kind of offset whereby someone using less than their presumed entitlement to emissions creates a credit. Like the Magic Pudding double the presumed entitlement and you double the credit.

Apart from rubbery accounting I’m sure other fudges will emerge. Perhaps someone will put some solar troughs in front of Hazelwood and declare the whole setup to be honorary renewable. Not just Australia but Germany, Japan and others will be doing it too.

Here I’ll outline an answer. Getting a carbon tax enacted in the US can be much easier than people think. I’ve already sketched what the tax should look like above on 14 July 2011 at 9:27 AM.

To pass the tax may require just a few citizens–or even one–working with Congress. The secret is to make the deal attractive to most citizens and lawmakers. Democrats (the left) will get the holy grail of controlled CO2 emissions; Republicans (the right) will get lowered corporate and capital gains taxes, with replacement revenue from a less-distortionary consumption tax.

Since there are many moderates in the Senate who want both these things, they should be contacted first to form a nucleus of support.

There are those who think that we don’t have to do anything about climate change. OK, the news that Australia is trying to do something about it won’t interest those. There are those, like myself, who agree that we do need to do something but despair at anyone ever actually doing the right things. At which point we should raise two cheers for what Australia has just announced that it’s going to do.

Agree, John Daley, Tristan Edis (and recently Tony Wood) have provided some of the best, considered, analysis of carbon pricing. While their “technological agnostic” position is economically credible, it is obvious that no matter how effective carbon pricing might turn out to be in achieving marginal reductions and uncovering “unthought of opportunities lying under rocks”, a failure to address the core issue of baseload replacement will result in a failure to ever achieve deep reductions. Like Garnaut, Jotzo, Quiggin and others, most economists have yet to be convinced that the critical issues of power and energy density, intermittency, redundancy, and limits of thermodynamic cycles cannot be overcome with carbon pricing.

While I think carbon tax is necessary some of Tony Abbott’s criticisms are justified. I think c.t. is needed to prevent new coal plant being built and to spur at least some efficiency gains. Now minister Greg Combet has to defend the likely purchase of overseas offsets at the 2015 progress review. 2010 emissions were 580 Mt CO2e and we want to get to the weak target of 480 by 2020. The midpoint is 530 but I’d guess by 2015 we’ll be around 550. Thus we might need to buy around 20 Mt of offsets say at $5/t costing $100m. Some lucky sustainable basket weavers are in for a bonanza.

Liberal spokesman Greg Hunt suggests the offsets may not be genuine GHG reductions.http://news.ninemsn.com.au/national/8289208/labor-slams-abbotts-white-carbon-policy
I agree; they are not real cuts in the sense of permanent reductions from a fixed baseline. Therefore the outlay is a delusion, a waste of money and a copout. Other carbon tax woes include the fact Hazelwood can never be fully replaced by gas and the quiet laugh Asian steel mills must be having getting our coking coal carbon tax free while locals Bluescope and OneSteel have to pay it. Don’t ditch the carbon tax, fix it.

a failure to address the core issue of baseload replacement will result in a failure to ever achieve deep reductions. Like Garnaut, Jotzo, Quiggin and others, most economists have yet to be convinced that the critical issues of power and energy density, intermittency, redundancy, and limits of thermodynamic cycles cannot be overcome with carbon pricing.

Excellent comment.

The Carbon Tax and ETS is arguably the most important policy decision facing Australians right now. It will have consequences that last many decades. Therefore, I am surprised it is not the dominant item of discussion on BNC. The BNC comments policy states:

The motivation for the blog (henceforth) is to seek the most effective solutions and discuss the pros/cons.

So, why isn’t the carbon tax and alternatives to it dominating the BNC discussion?

I’d like to expand Graham Palmer’s comment.

Carbon Tax and ETS in Australia will make no difference to the climate. But they will severely damage our economy. They are productivity destroying policies. This will make us less able to implement the most effective solutions (to everything) in the future.

The carbon price in Australia will not affect world emissions, unless it is so high it drives us into a deep, sustained recession. In the absence of economically viable technologies to replace fossil fuels, the only way we can get deep emissions cuts is with a deep, sustained recession.

I share some of your concerns Peter – the complete absence of serious public policy discussions of baseload alternatives in the political and policy debates makes the whole exercise rather pointless – discussions of wind, solar, hypothetical geothermal, theoretical carbon capture, are really just a sideshow if the serious work of baseload coal replacement is ignored. There are a myriad of marginal abatement opportunities if we try hard enough, or raise the carbon price high enough, but they are always going to be peripheral while we remain dependent on coal. Regrettably, any attempts to raise serious debate in the Australian media tend to be stifled, or revert to belief systems, such as “baseload wind or solar”. Here’s one small attempt in Dissent magazine (sorry, article not available online):

Thank you for the link. Isn’t it interesting that the editor of the page chose to put Mark Diesendorf’s article ahead of yours.
I agree with your points. This is the one I think is the most important.

There are a myriad of marginal abatement opportunities if we try hard enough, or raise the carbon price high enough, but they are always going to be peripheral while we remain dependent on coal.

I’d like to develop this thought.

My main point is that without alternatives to fossil fuels, we cannot cut emissions by much without a deep sustained recession. The reason is that without the ability to substitute non fossil fuels for fossil fuels, there is little opportunity to cut emissions.

If we raise the carbon price high enough we will shift our high intensity industries off shore. And we will stall economic growth. That would reduce emissions. It would also cause devastating social consequences, health issues – including fatalities! This is not exaggeration.

How serious is the problem. Let’s consider this one step at a time. Let’s look first at the limit position.

Energy use and carbon intensity are somewhat elastic to price. The energy intensity and carbon intensity of the Australian economy has been improving for decades. The key question is: how much faster can it improve if we impose a carbon price without allowing economically viable alternatives to fossil fuels?

We can improve energy efficiency a little faster than we are already doing. But we cannot reduce emissions intensity much without a viable alternative to fossil fuels.

If we assume no international trade in emissions permits and the rate of improvement of energy intensity and Emissions Intensity will not increase (the assumptions for Case 1), then the only variable that responds to the carbon price is the GDP per capita growth rate.

Applying the parameters used in the DCCEE’s projections, the GDP per capita growth rate would have to fall from 1.2% p.a. (Treasury Projection) to -1.7% p.a. average for 8 years. That is a very deep, very long recession.

Once again, the key question is: how much faster can emissions intensity improve if we impose a carbon price without allowing economically viable alternatives to fossil fuels?

Let’s get some feedback and discussion about Case 1 before we consider Case 2.

A wide range of political parties, governments, editorials, NGOs and academics advocates something of a standard set of policies to ﬁght global warming or reduce energy consumption in the interests of sustainability or energy independence: energy efﬁciency, voluntary frugality, renewable energy, structural change, waste reduction, clean production, recycling and consumer efﬁciency. This paper has sketched and classiﬁed theoretical reasons why these policies do not achieve their environmental purpose – whatever other virtues they may have. Empirically, to my knowledge, there has never been proof that these measures or strategies work. Indeed, in spite of efforts along the lines of these strategies, energy consumption continues to climb. The trend is not even broken.

I think the obvious answer to your scenario is that the targets will be re-written, the tax will be modified or repealed to maintain political credibility, and business-as-usual will prevail until necessity forces a community re-evaluation of energy policy. But a sobering quote by Dr W.H.Connolly in 1969:

It may seem something of an anticlimax that in Victoria we have no definite plans even for a first nuclear power station, but we are keeping well abreast of world practice and thinking. On present indications our next power station after Yallourn ‘W’ will not be nuclear, but after that we just do not know.

Cecil Edwards, 1969, Brown Power : A Jubilee History of the State Electricity Commission of Victoria, page 276

Thank you for the link tom the Alcott paper and the two quotes. I’ll havce to read the Alcot paper in slow time.

The quote by Dr W.H. Connolly in 1969 is a sobering reminder of how much time we have wasted; 42 years and counting.

You said:

I think the obvious answer to your scenario is that the targets will be re-written, the tax will be modified or repealed to maintain political credibility, and business-as-usual will prevail until necessity forces a community re-evaluation of energy policy.

I agree. However, my fear is about how the community re-evaluates energy policy. If the practices of the past 42 years are a guide to the future then we will have more community “guidance” and intervention in the details of what energy policy should be. More intervention by those who don’t understand.

What we should have instead is the policy that defines the required outcomes – energy security, high quality, least cost and leas environmental damage in all ways. That can be controlled with light regulation.

This excellent Chatham House report of a year ago gives the two options. It also says the half way house, which is what we have, is the worst of all options.

Electricity – Social Service or Market Commodity?The importance of clarity for decision-making on nuclear build</i?

…there seems to be a fundamental lack of clarity as to whether electricity is to be delivered by a competitive market, or whether government will intervene on a regular basis to ensure, or seek to ensure, the delivery of a series of social and industrial goals.This paper will argue that a ‘middle way’ on this issue would be worse than a purer stance, be it either that electricity is a commodity to be delivered in a stable marketplace or a social and industrial service to be delivered through central governmental direction.

…

But in those countries in which there is a strong suspicion that government may be
unable to resist interfering, nuclear investment still looks risky, perhaps unmanageably so. To lose an investment of the size required to build a nuclear plant because of unpredictable regulatory action by future governments not yet elected might prove a risk too far. Various approaches have been pursued to address this – for example, in the USA significant incentives for new commercial reactors were included in the Energy Policy Act of 2005, including production tax credits, loan guarantees and insurance against regulatory delays.

Forward not back?

None of this analysis necessarily offers much comfort to those who long for a return to the days of the Central Electricity Generating Board. The command-and-control model in practice often failed to deliver on its alleged advantages. Most notably, isolated from competitive pressures, the underlying costs of power production were high. It is difficult to escape the conclusion that investment decisions were often taken on the basis of a visceral attraction to the technology in question (or hatred of the alternatives) – nationalised industries were often run by people who had made their way up through the technical side of the business97. Managers’ practice of ‘picking winners’ (or, just as often, losers) rather than testing decisions against market criteria delivered great power into the hands of those with most influence with government rather than necessarily those with the best commercial case. It was often policy to pursue a diversity of supply sources and an excess capacity margin (reaching 45% in Canada, 50% in Spain and 70% in parts of Australia) in order to guarantee secure supplies against unexpected occurrences. The general laxity which often besets companies operating in a monopoly situation (in which the pressure to reduce or contain costs is weakened by the absence of consumer choice) was also in evidence – for example, success in collecting payment for electricity and preventing theft varied significantly from country to country.

In the UK the system did not even deliver diversity of fuel supply. The monopolistic
Central Electricity Generating Board came under enormous pressure from successive
governments to use domestically-mined coal for the bulk of electricity production – as
late as 1990 British-mined coal was still responsible for 65% of electricity supplies.
Such a policy delivered disproportionate political power to the National Union of
Mineworkers which on several occasions was able to take on the government of the
day by causing or threatening widespread power outages.

POLICY RECOMMENDATIONS

• The new coalition government should decide, and make clear, the extent to which it regards secure power supplies as a matter for the marketplace
(while setting an appropriate and stable role for regulators in shaping market rules to encourage environmental protection, maintenance of appropriate capacity margins, e.g. by considering the option of capacity markets or capacity payments), accepting that very high power prices may not be reflective of abuse of market power but may be necessary to send the signals for new investment; and the extent to which it intends to allow social and political considerations to take precedence.

• The government should ensure that the locus of decision-making is clear, not suggesting simultaneously for example that it has decided that there should be a new programme of nuclear stations or offshore windfarms and that that decision is not one for governments at all.

• The governments must ensure that planning and regulatory procedures cannot be used by opponents of a particular technology, or of electricity generating technology in general, to delay projects and push up their costs to the extent that they become effectively impossible in a competitive environment, irrespective of the objective merits of such projects.

• The governments must recognise that, should it wish to pursue an interventionist stance in order to promote political priorities and hence intervene more or less capriciously in markets (e.g. setting price caps at constantly changing levels), it may well damage the confidence of investors to commit to funding new generating capacity at the appropriate time. Appropriate schemes of compensation for power generators which lose income because of regulatory action, such as those offered in the 2005 Energy Act in the US, may be a workable adjunct to interventionism, but may not be as efficient as allowing market forces to do their job.

I’ve read the Grimston paper before – interesting read with important lessons for Australia.

My one observation is that in the Australian pre-privatisation era, the technical agenda was set by engineers within the respective SEC’s who actually understood power systems (even if they insisted on wide reserve margins). But the Kennett privatisation era coincided with the emergence of the climate debate, with the result that the agenda on energy policy began to be set by social scientists rather than engineers, and has been dominated by the ‘soft left’ ever since. It seemed to me through the late 90’s and early 2000’s, that the professionals pushing a ‘realist’ position on energy policy were often climate sceptics, which undermined their legitimate advocacy and simply pushed the educated left towards the idealist/environmentalist position. The result now is that we have a completely dysfunctional energy debate. My analogy is that the current carbon tax debate is akin to the government implementing a major health reform, but completely ignoring public hospital reform, preferring to talk up naturopathy and homeopathy as the ‘long term solution’ to health policy.

More evidence the bureaucrats are getting further divorced from reality comes with yesterday’s announcementhttp://www.cleanenergyfuture.gov.au/international-linking-news/
In 2015 Aussie farmers will be able to sell their carbon credits on the international market. However unless they are unusual kinds of farms that don’t have vehicles, livestock or fertiliser most of them won’t have credits to sell. Less-emissions-than-otherwise is not less emissions from a fixed baseline.

The other big event in 2015 is the move from carbon tax to emissions trading. That means a CO2 cap for Australia which is supposed to be 480 Mt CO2e and subsequently declining. If the whole world gets on board that almost certainly means less coal and LNG exports. See the ‘our coal’ link in the sidebar.

Hypothetical question; what if the rest of the world does not get on board? Well in that case I guess we’ll have to do it for them and cut their fossil fuel allowance by x% a year. If other countries can get cheap and reliable gas and coal elsewhere good luck to them. Strangely Abbott can see this is the logical course of events but Gillard can’t. As for the bureaucrats they are in dreamworld.

Thank you for Alcot’s paper. I am going away tomorrow and won’t have time to read it carefully beforehand. Here is a preliminary comment having read only part of it so far.

Alcot says in the Abstract:

Next it is shown that lowering any of these ‘right-side’ factors causes or at least enables the other two to rise or ‘rebound’. … Success in lowering any of the right-side factors does not necessarily lower Impact.

France demonstrates this is not true. France’s emissions from electricity are low due to over 90% of it being generated by nuclear and hydro. This demonstrates “Technology”, a right side factor, can enable a country to be affluent without emissions.

If we allowed nuclear, and had allowed nuclear for the past 50 years without impediments, world emissions would be 10% to 20% lower now and nuclear would be safer and far cheaper than it is. Importantly, the world would be in a better position to implement a faster emissions reductions trajectory. Therefore, I believe Alcot is wrong when saying, in effect, tax and regulation are better solutions than technology.

Alcott’s definition of technology does not refer to the type of power technology but rather, technological gains in efficiency, such as the technological improvements in vehicle efficiency. He suggests for example that improved car fuel efficiency will lead to more kilometres driven, more money to spend on other goods, a decrease in fuel usage leading to: lower demand, lower costs, which simply drives more demand by others. He believes in high rebound or ‘backfire’. This is quite different to the case of ‘nuclear technology’.

Yes, but this ignores the most important factor (IMHO). As I discussed in the post @ 24 August 2011 at 6:33 PM, ‘Emissions Intensity per GDP’ comprises two factors: ‘Energy Intensity’ and ‘Emissions Intensity per GJ’.

He is dealing with only the Energy Intensity component. That is improving but cannot be improved a lot faster than we are already doing. Improving Energy Intensity without a substantial change in ‘Emissions Intensity per GJ’ will have only a small effect on total emissions and will behave as Alcott says.

But he has ignored the important component: ‘Emissions intensity per GJ’.

If we want to reduce emissions from fossil fuels we have to substitute non fossil fuels for fossil fuels. If we do that economically we can have both affluence and low emissions. France has proved that for electricity. If we allow low emissions electricity to be cheaper – remove all the irrational impediments we have imposed on it over the past 50 years – then low emissions electricity will displace fossil fuels for heating and land transport.

(I still haven’t read the whole paper, so may have misinterpreted what II’ve read so far)

As a citizen of the US, I am especially interested in what James Hansen, one of our leading climatologists, would say about Australia’s proposed carbon tax. I haven’t seen any recent comments–he’s probably too tactful to offer a direct opinion. But this marvelous story from about a year and a half ago gives one a good idea.

If James Hansen is objective on this subject he might suggest to Australian’s they should ask themselves these questions:

1. Will the CO2 tax change the climate? If so by how much?

2. Will CO2 tax applied in Australia reduce world emissions? If so, by how much?

3. Will the CO2 tax have an effect on the ecology of Kakadu and the Great Barrier Reef? If so, by how much?

4. Will the CO2 tax change the rainfall in the Murray Darling Basin? If so, by how much?

5. What will be the total cost of administering and complying with the scheme?

6. How will the emissions avoided be measured (for example by wind farms) given we have no way of measuring the emissions avoided by wind farms. (Australia does not measure emissions from power stations)

7. What will be the effect of changing assumptions – such as when the government is eventually forced to recognise that wind farms and solar energy avoid far less emissions than the government’s and Green’s propaganda would like us to believe.

8. How much fraud will there be with Carbon trading in Australia? Who is the ultimate victim of the cost of such fraud?

9. How much fraud will there be with our purchasing of international carbon permits? Who is the ultimate victim of the cost of such fraud?

10. How can we expect to prevent carbon trading fraud in Australia, let alone in international trade of carbon permits, given we can’t even control internet scams and fraud now?

11. What is the benefit? What is the cost?

12. Is the Carbon tax simply “Socialism dressed up as environmentalism”?

13. Do we really want to go down the path of economic destruction that the EU has persued?

Let’s see whether we can find some common ground. I like best your succinct question #11: What is the benefit? What is the cost? Regarding the latter question, I’ve seen mentioned on some conservative sites, including one that you have quoted, a projected cost of A$1.35 trillion over 38 years, based on government estimates. For discussion purposes, would you accept this figure as a starting point?

Happy to oblige. The theoretical basis for the benefits of a carbon tax are: The consensus of science–and the assumption of this website–is that climate change is a serious threat. The consensus of economics is that a carbon tax would be the most cost-effective policy remedy to combat it.

Yes, Australia has some special circumstances, and the grounds for rejecting this particular carbon tax are not without merit. If you in Australia do reject it, fine with me. You may get a better one later on, perhaps after Australia accepts nuclear.

But it may be the other way around–the carbon tax will pass, and pave the way for nuclear. Do you have any interest in discussing this question: Will the passage of a carbon tax hasten or retard the acceptance of nuclear?

Do you have any interest in discussing this question: Will the passage of a carbon tax hasten or retard the acceptance of nuclear?

Yes. if it is a serious discussion.

However, I have discussed that at length on the “Alternative to Carbon Pricing” thread. I’ve made around 200 comments on the subject on that thread. So I’d ask you to background yourself on those comments as a first step. I explain why, IMO, the Australian Carbon Tax will not lead to a faster reduction of Australia’s emissions nor world emissions. In fact, I believe it will have the opposite effect.

I would expect you to answer my direct questions with direct, straight answers. Something which has been largely avoided to date.

I will be unable to get involved in any serious discussion for a few days.

The problem that I think PL alludes to, which economists understand but few others seem to have picked up on is that the tax churn is enormous relative to the abatement because the tax will apply to EVERY unit of carbon based energy, but only result in abatement at the margins. IMO, it is hard to criticise taxing, say carbon, rather than income, profits, etc., even if it turned out that taxing carbon didn’t actually reduce carbon emissions much, providing the scheme simplified the tax system and was strictly revenue neutral. This could have been an opportunity for reform, but alas looks like another expensive tax churn, without a matching energy policy to actually drive investment in low emission baseload.

I agree about the tax churn. This an important issue. There are many other issues as well. I’ve addressed them in considerable detail on the “Alternative to Carbon Pricing” thread. I’ll make some short points off the top of my head below.

First, for Huon’s benefit, you do not need to explain the theory to me. I’ve been involved in and following this since 1993 when ABARE led the world on ETS for CO2 emissions (“Tradeable Emissions Permit Scheme”, ABARE Research Report, 93.5).

Other issues:

1. Australian Carbon Price, in the absence of an economically efficient international trading scheme, will not reduce world emissions. It may increase them.

2. Australian Carbon Price will seriously damage our economy if it is set high enough to achieve the 2020 unconditional emissions target

3. Once we damage the economy we are less able to take the most appropriate actions for all the wants and needs society, not just CO2 emissions

4. Once that happens, long term issues like CO2 emissions will be put on the back burner; short term survival becomes the priority

5. Imposing an ETS is not a market mechanism. It is a government imposed market forced on us by government intervention. It is another constraint on efficient markets and business

6. The real issue is that we have imposed high costs on nuclear and made it to expensive. That was done by government interventions. We need to remove those impediments to nuclear before we consider a carbon price. If we do that fully and properly, nuclear will be able to provide the least cost electricity generation alternative. That is what our priority should be.

7. If we impose the carbon price before we face up to the real problem – impediments to low cost nuclear – we will not face up to the real problem. We’ll just sweep it under the carpet.

8. From then on, any consideration of nuclear will be of high-cost nuclear like in USA, Canada, UK, Europe.

9. Raising the price of energy is bad policy. Energy is a fundamental input to all we have. It makes society better. It improves health and well-being of everyone. We should always do all we can to reduce the cost of energy, not raise it.

10. If we raise the cost of electricity in Australia, then we will slow the switch from gas to electricity for heat and from oil to electricity (or fuels produced by electricity). This means emissions will stay higher for longer.

11. If we raise the cost of electricity generation in Australia it will cause us to be less able to help the developing nations to adopt low cost low emission electricity generation. This means the developing nations will build coal generation rather than low emission generation. Since the developing world is projected to contribute about 80% of the emissions growth in the decades ahead, clearly anything we do to increase the cost of electricity generation in the Developed countries will increase, not decrease the problem of world emissions to 2050 and beyond.

12. The reason we are having this argument is that there is a reluctance to tackle the real issue and a reluctance to confront those who are causing it now and have been for the past 50 years.

13. This is avoidance. We should confront the real problem, not try to paper over it with another bad policy.

There are also the issue of fraud both in Australia and especially in international permit trading. The current proposal is banking on low cost international permits to provide 66% of the emissions reduction. Anyone can see where that is going to lead.

And the compliance cost. This will be very high. Much higher than is being admitted now.

This scheme is seriously bad policy. There has been no consideration or analysis of the alternative. That is seriously irresponsible and incompetent. Discussion of the alternative is prohibited in the Australian bureaucracy, just as it was in the 1990’s.

I totally agree with Peter Lang. The CO2 tax is a really bad idea. It will damage the Australian economy, no other country is going to follow our lead.
There is no need for it. Just regulate that power plants produce no more than x tonnes of CO2 per GWh.
There will be no alternative to nuclear if the x is set low enough, and the coal using energy companies will have to follow.
No one commented when I mentioned the UK’s Clean Air Act. But maybe something along those lines would be the answer..

Kevin Bennewith, I think you’re referring to the UK emission performance standard. IMO emission performance standards are favoured by engineers because they address the core issue directly without impinging unduly on the rest of the economy. But the economists, social scientists and bankers who have driven carbon pricing want to use financial instruments to drive change because this is what they understand and profit from. Adopting emission performance standards and simply getting on with the obvious engineering solutions would largely cut out many of the career greenhouse professionals.

The policy options that have been considered are:
– Option 1: Introduce an EPS of 600gCO2/kWh
An annual limit on the amount of CO2 a plant can emit, equivalent to 600gCO2/kWh for plant operating at baseload1
– Option 2: Introduce an EPS of 450gCO2/kWh
An annual limit on the amount of CO2 a plant can emit, equivalent to 450gCO2/KWh for plant operating at baseload2, with exemptions for projects in the UK Carbon Capture and Storage demonstration programme or projects benefiting from European funding for commercial scale CCS. The preferred option is Option 2. This option allows for greater flexibility for the CCS Demonstration Programme.

Alan Kohler suggests there will be a kerfuffle about buying foreign offsets in 2015http://www.abc.net.au/news/2011-09-14/kohler-unspoken-truth-about-carbon-permits/2898600
I’m bloody sure of it. The Australian public will be outraged if hundreds of millions of dollars are spent on dodgy offsets. Aren’t our sustainable basket weaving projects good enough? However a lot of other things will have happened by 2015 including I suggest
– giving ‘efficiency’ a red hot go, but finding it wanting
– public awareness of gas/renewables co-dependence
– one or more oil price shocks
– some disturbing weather
– failure to replace nontrivial amounts of brown coal with gas
– nuclear rethink rethinks by Germany and Japan.

The false prophets of efficiency and renewables need to be discredited in the public’s mind. That won’t happen with direct action because the true believers will say we coulda run that aluminium smelter on solar panels, or whatever. Therefore I think the path we are on is not necessarily bad.

For what it’s worth, challenged by your excellent comments from Sep. 13 at 8:10 PM and 9:03 PM, I did a little more research. I found out that in 2020 the carbon price of the ETS will float, so that apparently there will no longer be a price floor that business can count on. For me that was the last straw.

Before I had been ambivalent about Australia’s carbon tax and ETS, but had been willing to give it the benefit of the doubt because the problem of climate change is so serious. As a US citizen I will still not presume to tell Australians what they should do. But I am prepared to say that if the same formulation of a carbon tax were proposed for the US I would oppose it.

I remain committed to the idea of a carbon tax, especially one such as you, GP, outline in the second half of your comment. And I will continue to evaluate all points of view. But for now, this tax deviates too much for me.

Do we really want our government to pass legislation with poison pills so future governments cannot amend or appeal bad legislation? Do we want to implement legislation that prevents us adapting to changing knowledge and changing international conbditions? Is this government so arrogant it thinks it knows what is best about the future – forever – so it feels it must prevent future governments from being able to change its legislation? Surely, good government and good management is to make the best policy based on the knowledge and situation at the time but also be sure to minimise the cost of later changes. The carbon pricing legislation is doing the opposite.

That is, without coordinated global action, Australia’s actions are futile.

It strains credulity to believe Australia’s CO2 price will reduce world emissions, change the climate, change sea level, change the ecology of Kakadu or the Great Barrier Reef or change the rainfall in the Murray Darling Basin.

There is no demonstrated benefit in the absence of an economically efficient, international emissions trading system.

The Australian government deserves much praise for seriously taking on the problem of climate change. But they have missed a great opportunity.

If they had proposed a plan that was simple, non-bureaucratic, popular, and cheap, then even if the rest of the world did not follow suit immediately, Australia would not have been much disadvantaged economically, and would probably have come out ahead. “First do no harm.”

In addition, such a plan, being a better mousetrap, might have served as a guide for other countries, catalyzing an international system, and resulting in great climate benefits for Australia and for all.

But as it is, unnecessarily high economic pain may yield unnecessarily low climate gain.

Australia should not implement carbon pricing until two conditions are met:

1. Australia has removed all the impediments to low-cost nuclear energy and has moved to accept and fully endorse the move to low-cost nuclear energy; and

2. The countries that emit as much as or more CO2e than Australia have agreed a legally binding, international, economically efficient emissions trading system.

I recommend Australia establish a policy (with legislation and funding) to implement low-cost nuclear energy with the objective of it providing in the order of 80% of our electricity generation within three to four decades from now.

I am not sure how you derived the number of 40. But I’ll run with that.

We have three larger states and two smaller states (and and island state that won’t need nuclear – besides, they have Greens Leader Bob Brown to protect them from development).

So two multi-unit power stations in each of the larger states and one in each of the smaller states makes a total of eight power station in five states. So we’d need one new unit per power station every 5 years. Seems entirely reasonable to me, at 40 1GW units by 2050. Take into account that, as time progresses, the power stations will become quicker to build, smaller and more powerful, and cheaper. The current generation are already being built in Asia in around 3 1/2 years.

I made a submission to the “Joint select committee on Australia’s clean energy future legislation” and an addendum. They use a lot of material from BNC posts and comments. I include them below for those interested. Only the foot notes are missing

Peter Lang is a retired geologist and engineer with 40 years experience on a wide range of energy projects throughout the world, including managing energy R&D and providing policy advice for government and opposition. His experience includes: coal, oil, gas, hydro, geothermal, nuclear power plants, nuclear waste disposal, and a wide range of energy end use management projects.

Submission

The government has been unable or unwilling to answer my questions. Until the government can answer these questions it should not proceed with the Clean Energy Future Legislation. To proceed without being able to answer these questions would be incompetent and negligent.

My questions are listed in Attachment 1. They can be summarised as:

1. What is the benefit?

2. What is the cost?

3. Has due diligence been done?

4. What is the risk management strategy? (to minimise the cost to the taxpayer if the legislation has to be amended or repealed in the future?)

Below I expand on these questions and provide partial answers that the government has been unable or unwilling to provide. Some key issues are listed in Attachment 3.

What is the cost?

Treasury modelling has used optimistic assumptions. They are not realistic. So Treasury’s cost projections cannot be trusted.

Unrealistic assumptions are:

1. The world will quickly adopt an international CO2 emissions trading scheme

2. Australia’s ETS will integrate successfully with whatever international scheme is adopted.

3. Australia can set an example to the world and other countries will follow our example.

4. International emissions permits purchased by Australia will be cheap, free of fraud and will be effective at cutting world emissions.

5. Cutting world CO2 emissions will produce the benefits assumed.

6. The assumed benefits can be achieved more cheaply by cutting CO2 emissions than by adapting to climate change, whatever the climate changes may be.

In the absence of international trade in emissions permits and the absence of an economically viable alternative to fossil fuels, a simple calculation shows that GDP per capita growth would have to fall to -1.7% per annum, average for 8 years, to achieve the governments unconditional 2020 emissions targets (see Attachment 2).

What is the benefit?

There is no demonstrated benefit in the absence of an economically efficient, international emissions trading system.

Treasury states:

“Without global action, we will experience severe water shortages, higher temperatures and less water in the Murray Darling for irrigation. The consequences of not acting will flow through to food prices and the cost of living more broadly.”

That is, without coordinated global action, Australia’s actions are futile.

It strains credulity to believe Australia’s CO2 price will reduce world emissions, change the climate, change sea level, change the ecology of Kakadu or the Great Barrier Reef or change the rainfall in the Murray Darling Basin.

Has due diligence been done?

No.

The following email sent to the Prime Minister explains what is due diligence and why it should be done before we commit to a very costly policy, especially one with doubtful benefits.

“Dear Julia,

Thank you for your message. As a self funded retiree I will happily receive whatever allowances your plan provides for me. However, I despair over the way your carbon tax issue has arisen. I think your conclusions are premature.

Despite what your advisors say, the SCIENCE IS NOT SETTLED. In the case of climate science there is a lot of evidence that global temperatures have stopped rising (despite the continuing rise in CO2 levels) and that the impact of CO2 may not be as severe as the IPCC would have you believe.

Before using the state of knowledge as it is currently known in order to make far reaching policy decisions, you need to carry out Due Diligence studies in order to verify that what you are being told is correct. The level of detail required to execute proper Due Diligence for something as complex as the dynamics of climate change is truly enormous. Peer review is not due diligence. Neither are the IPCC reports. Certainly not the Garnaut reports.

Peer review of published papers is in general a coarse filter to ensure that if the evidence which the paper examines is valid and if the writers have done their sums correctly and if the results appear to make sense and add to the body of human knowledge then it’s OK to publish. Peer reviewers are unpaid experts in the same field as the writers of the paper. They seldom see all the basic data, the computer codes, the corrections, deletions and adjustments, the instrument calibration details, full details of all assumptions, etc, and their judgments are often coloured by their personal prejudices. Also they don’t get to see the experimental equipment and test environments or the actual samples that form the basis for the paper being reviewed. Usually none of this matters because scientific progress is self correcting. If a rocket scientist gets it wrong the rocket may crash or wander off course or fail in some other way. Oh dear, what a shame. Well, we’ll get it right next time round.

Predicting climate change is not rocket science. It’s much, much more difficult. And the consequences of getting it wrong may be much, much more costly. So what do you do, given that there may be something happening that could cause humanity immense harm unless we change something? You conduct proper Due Diligence studies – engineering quality, not academician quality.

You need to get the protagonists – those who claim we have a severe, looming problem – to assemble their best arguments and evidence to support their case. They should only offer papers which have been published with full public disclosure of all the data and computer codes so that the claims made within the paper can be reproduced by others. Then you appoint a Due Diligence Team (DDT) and give it a proper briefing (a Scope of Work). In the commercial world DDTs are usually independent disinterested contractors. They will need to see all of the things that peer reviewers usually don’t see as described above. In fact for proposals which will cost the community billions, the DDT will want to see a lot more. For example, many academic papers cite other previously published papers. These citations may have to be examined too. They will want to see the ‘bad’ data as well as the ‘good’. Also, published papers and other evidence may be invited for positions purporting to be contrary to the protagonists case. There is plenty of evidence which appears to throw doubt on many aspects of the IPCC case for climate change (the politically acceptable expression for AGW) and this will need to be subjected to DDT examination too.

Unlike the authors of the IPCC reports who are nearly all climate scientists, the DDT should comprise physicists, economists, engineers, mathematicians (especially statisticians), geologists, biologists and climate scientists. But no more than 25% of the team should be climate scientists. It’s doubtful if the DDT will ever be able to achieve certainty on any matter but they should be able to come much closer to the truth than has the IPCC.

Contrary to what you may have been told, the IPCC reports comprise the assessment by no more than 40 or 50 climate scientists, of all the published papers that in their opinion support in some way, climate change outside the realm of natural variation. Reviewers of each chapter in the reports were not permitted to see data which was not expressly provided in the relevant papers. In fact one reviewer was threatened with dismissal because he kept asking to see data. There is no audit trail for positions taken by authors of each chapter. None. In the business world, if a financier were asked to commit billions for some project on the basis of a report of the quality of any of the IPCC Assessment Reports he would tell you to “Go away – don’t waste my time”.

I’m a retired engineer with a background in project management. Many of my peers agree with me about this.

I recommend and request the government does not proceed with the proposed legislation until:

1. The government can answer my questions and can convince the Australian public that the policy is what Australia needs.

2. The policy is put to the voters at an election.

3. It is clear that Australia’s policies are aligned with the policies of the major CO2 emitting nations, especially our trading partners and competitors.

4. We are not having our future dictated by Europe for Europe’s economic advantage.

5. Proper due diligence has been done in accordance with accepted business practice for an investment of many trillions of dollars.

6. Proper risk management is incorporated in the legislation so that the legislation can be amended or repealed at minimum cost to the taxpayer if that is the decision of a future elected government.

Attachment 1 – Unanswered questions

1. Will the CO2 price, applied in Australia, change the climate? If so, by how much?

2. Will a CO2 price, applied in Australia, reduce world emissions? If so, by how much?

3. Will the CO2 price have an effect on the ecology of Kakadu and the Great Barrier Reef? If so, by how much?

4. Will the CO2 price change the rainfall in the Murray Darling Basin? If so, by how much?

5. Will the CO2 price have an effect on sea level? If so, by how much

6. What will be the total cost of administering and complying with the scheme?

7. How will the emissions avoided (e.g. by wind farms) be measured given we have no way of measuring the emissions avoided by wind farms. (Australia does not measure CO2 emissions from power stations)

8. What will be the effect of changing assumptions – such as when the government is eventually forced to recognise that wind farms and solar energy avoid far less emissions than the government’s and Green’s propaganda would have us believe.

9. How much fraud will there be with CO2 trading in Australia? Who is the ultimate victim of the cost of such fraud?

10. How much fraud will there be with our purchasing of international carbon permits? Who is the ultimate victim of the cost of such fraud?

11. How can we expect to prevent carbon trading fraud in Australia, let alone in international trade of carbon permits, given we can’t even control internet scams and fraud now?

12. What is the benefit? What is the cost?

13. Is the Carbon pricing scheme simply “Socialism dressed up as environmentalism”?

14. Do we really want to go down the path of economic destruction that the EU has pursued?

Attachment 2 – What’s the cost?

Without economically viable alternatives to fossil fuels, we cannot cut emissions by much without a deep, sustained recession. The reason is that without the ability to substitute non fossil fuels for fossil fuels, there is little opportunity to cut emissions.

If we raise the carbon price high enough we will shift our emissions intensive industries off shore. And we will stall economic growth. That would reduce emissions. It would also cause devastating social consequences, health issues – including fatalities! This is not an exaggeration.

How serious is the problem? Let’s consider this one step at a time. Let’s look first at the limit position.

Energy use and carbon intensity are somewhat elastic to price. The energy intensity and carbon intensity of the Australian economy has been improving for decades. The key question is: how much faster can it improve if we impose a carbon price without allowing economically viable alternatives to fossil fuels?

We can improve energy efficiency a little faster than we are already doing. But we cannot reduce emissions intensity much without a viable alternative to fossil fuels.

If we assume no international trade in emissions permits and the rate of improvement of Energy Intensity and Emissions Intensity will not increase (the assumptions for Case 1), then the only variable that responds to the carbon price is the GDP per capita growth rate.

Applying the parameters used in the DCCEE’s projections, the GDP per capita growth rate would have to fall from 1.2% p.a. (Treasury Projection) to -1.7% p.a. average for 8 years. That is a very deep, very long recession.

Once again, the key question is: how much faster can emissions intensity improve if we impose a carbon price without allowing economically viable alternatives to fossil fuels?

Case 2 – No nuclear, no international emissions trade, energy and carbon intensity is elastic

Population growth rate will not be changed by the carbon tax.

The rate of improvement in Energy Intensity will not change much – unless we shift energy intensive industries off shore (e.g. we can’t replace buildings with more energy efficient buildings in 8 years, and we cannot substantially increase the rate of improving the efficiency of the vehicle fleet)

We cannot significantly reduce the Carbon Intensity while we do not allow viable alternatives to fossil fuels. Gas replacing coal for electricity generation will reduce emissions a small amount (e.g. save at most 12 Mt/a by replacing Hazelwood brown coal power station). But there will be unintended consequences, most of which we have no idea about. One that can be seen is that people will move from electricity to gas for heating and hot water. That is a short term effect. Once we do move to low emission electricity we will want all gas users to move from gas to electricity. It seems the more we stuff around, interfering and trying to direct what we think is best, the worse we make things.

In short, we cannot reduce emissions much in Australia without a viable alternative to fossil fuels. Therefore, a carbon price would have to be high enough to severely slow the economy if we are to achieve the 2020 targets without a viable alternative to fossil fuels.

Attachment 3 – Issues

1. An Australian CO2 price, in the absence of an economically efficient international trading scheme, will not reduce world emissions. It may increase them.

2. An Australian CO2 price will seriously damage our economy if it is forced high enough to achieve the 2020 unconditional emissions target.

3. Once we damage the economy we are less able to take the most appropriate actions for all the wants and needs of society, not just CO2 emissions.

4. Once that happens, long term issues like CO2 emissions will be put on the back burner; short term survival becomes the priority.

5. Imposing an ETS is not a market mechanism. It is a government imposed market forced on us by government intervention. It is another constraint on efficient markets and business

6. The real issue is that we have imposed high costs on nuclear and made it too expensive. That was done by government interventions. We need to remove those impediments to nuclear before we consider a carbon price. If we do that fully and properly, nuclear will be able to provide the least cost electricity generation alternative. That is what our priority should be.

7. If we impose the carbon price before we face up to the real problem – impediments to low cost nuclear – we will not face up to the real problem. We’ll just sweep it under the carpet.

8. From then on, any consideration of nuclear will be of high-cost nuclear, like in USA, Canada, UK, and Europe, rather than of low-cost nuclear.

9. Raising the price of energy is bad policy. Energy is a fundamental input to all we have. It makes society better. It improves health and well-being of everyone. We should always do all we can to reduce the cost of energy, not raise it.

10. If we raise the cost of electricity in Australia, then we will slow the switch from gas to electricity for heat and from oil to electricity (or fuels produced by electricity) for transport. This means emissions will stay higher for longer.

11. If we raise the cost of electricity generation in Australia it will cause us to be less able to help the developing nations to adopt low-cost, low-emission electricity generation. This means the developing nations will build coal generation rather than low emission generation. Since the developing world is projected to contribute about 80% of the emissions growth in the decades ahead, clearly anything we do to increase the cost of electricity generation in the developed countries will increase, not decrease the problem of world emissions to 2050 and beyond.

12. The reason we are having this argument is that there is a reluctance to tackle the real issue and a reluctance to confront those who are causing it now and have been for the past 50 years.

13. This is avoidance. We should confront the real problem, not try to paper over it with another bad policy.

Further to my submission of 19 September 2011, I would like to add the following.

I refer you to “Attachment 3 – Issues” points 6, 7 and 8; and to Recommendation number 3.

Extract From “Attachment 3 – Issues”

6. The real issue is that we have imposed high costs on nuclear power and made it too expensive. That was done by government interventions. We need to remove those impediments to nuclear before we consider a carbon price. If we do that fully and properly, nuclear will be able to provide the least cost electricity generation alternative. That is what our priority should be.

7. If we impose the carbon price before we face up to the real problem – impediments to low cost nuclear – we will not face up to the real problem. We’ll just sweep it under the carpet.

8. From then on, any consideration of nuclear will be of high-cost nuclear, like in USA, Canada, UK, and Europe, rather than of low-cost nuclear.

Extract from “Recommendations”:

Australia should not proceed with the proposed legislation until:

3. It is clear that Australia’s policies are aligned with the policies of the major CO2 emitting nations, especially our trading partners and competitors.

Addendum

I expand on Recommendation 3 as follows:

Australia should not implement carbon pricing until two conditions are met:

1. Australia has removed all the impediments to low-cost nuclear energy and has moved to accept and fully endorse the move to low-cost nuclear energy; and

2. The countries that emit as much as or more CO2e than Australia have implemented a legally binding, international, economically efficient emissions trading system.

I recommend Australia needs to establish a policy to implement low-cost nuclear energy with the objective of it providing in the order of 80% of our electricity generation within three to four decades from now.

To support this I provide the information below:

France has done this and its electricity generators emit just 8% of the CO2 emissions that Australia’s electricity generators emit. And France has near the lowest cost electricity in Europe.

As I write this, France is at 14:00h and at about the time of peak demand for the day. Demand is 55,000 MW. Nuclear is generating 78% of the power, gas 4%, coal 3%, oil 1%, hydro 8%, wind 1%. In addition, it is also exporting 5%. You can see that it has been exporting about 3000 MW to 5000 MW throughout the day. That is a pretty good indication that France’s electricity is cheap. Otherwise other countries would not be buying it.

France’s electricity generators are emitting 4,416 t CO2 per hour, or about 80 kg/MWh, which is about 8% of Australia’s emissions from electricity generation.

We could be doing that too if it hadn’t been for 50 years of anti-nuclear activism.

France commissioned most of its nuclear power capacity over a period of two decades. Australia could too. We’d need about half the nuclear capacity France has built. This would reduce our emissions from electricity generation by 90%. If we keep the cost of electricity low, electricity will displace (over time) gas for heating and oil for transport (with electric vehicles and/or with liquid fuels produced using electricity). Low cost, plentiful electricity will also allow for cheaper desalination without CO2 emissions and maintain Australia’s natural competitive advantage of low cost energy. This would allow Australia’s emissions to be reduced by 50% by 2050 from energy alone. But achieving it requires low-cost, not high-cost, electricity generation.

Below I argue why I believe nuclear can be the least cost way to generate electricity in Australia in the future without resorting to a Carbon Tax or Emissions Trading Scheme (ETS).

How?

Adding a carbon tax or ETS will add more government imposed regulatory burdens on industry, without removing any of the mass of state and Federal government imposed conflicting regulations, tax breaks, subsidies and other incentives and disincentives that exist now. Rather than adding to this mass of regulations that is inflating prices we should remove all that are unnecessary or distorting the market. That requires removing all the incentives and disincentives that favour one technology over another.

We will also have to pass legislation that sends a clear message to investors that the rules for new power stations have changed, and the change is permanent. We must convince investors that their investment will be secure and future governments will not renege. By sending this clear message the investor risk premium will move from nuclear to coal, over time.

To do this we will have to invest in (i.e. subsidise) the first nuclear power plants.

There are several parts to my argument:

1 Assume, as a starting price, the latest contracted price for new nuclear in a country building its first nuclear power plants, United Arab Emirates (UAE) .

2 Assume the initial price will decrease as a country develops the expertise and as world prices for nuclear come down over time.

3 Assume the government can move the investor risk premium from nuclear to fossil fuels by the legislation it enacts and the messages this sends to investors.

4 Assume the community is prepared to contribute (subsidise) the first plants, for the following reasons:

a. the long term benefits of lower cost, cleaner electricity,
b. energy security,
c. because the higher cost now is recognised as correcting the bad policy decisions in the past (anti-nuclear) and we have to bear a cost to correct those mistakes, and
d. the precedent has been well established by the subsidies for renewable energy and by nationalising the Australian communications network.

5 The community is prepared to invest in the first nuclear plants as a means to demonstrate to the investors that the community has a substantial financial investment in these plants. This is necessary to send the message to the investors that their investment is relatively secure against the government changing its mind and reneging on deals. (This is important because of the messages often sent by people who believe it is acceptable for the community to renege on deals with investors, as has happened frequently in the past).

6 The government will remove all the impediments to a level playing field for electricity generators. (I recognise the conflict with the previous points – needs to be nuanced)

Assumptions:

1. New coal power plants would cost $2,100/kW in 2015 under the assumptions used in the analysis (ACIL-Tasman, Table 35, p58)

2. New nuclear plants would cost $5,050/kW in 2015 in Australia under the assumptions used in the analysis (ACIL-Tasman, Table 35, p58)

3. The capital cost of nuclear will decrease by 15% in the five years following the commissioning of the first unit and cost reductions will continue at a declining rate (ACIL Tasman, Table 35, p58, Nuclear 2024-25 to 2028-29)

4. A better current estimate for capital cost for the first nuclear power station in a new country (instead of the ACIL-Tasman estimate) is the recently contracted price for the UAE nuclear power station. For this assumption to be valid we would also have to assume that Australia will adopt a regulatory environment that is no more onerous than UAE’s and we will address the investment risk so that the investment environment for nuclear in Australia will be as attractive as it is for nuclear in the UAE.

5. The UAE plant is 4 units of 1350MW for a total capacity of 5400 MW. The capital cost of the UAE plant, including initial fuel load and technology transfer is US$20.4 billion , or $3,800/kW

6. Investor risk premium in the USA for nuclear compared with coal is 26% (MIT, 2009).

7. We could expect the investor risk premium to be higher in Australia given that we have no nuclear industry and given the strong anti-nuclear sentiment in Australia.

8. I assume we will remove the impediments to nuclear and remove the incentives for fossil fuel and renewables so we can develop a ‘level playing field’ for all technologies. There are many regulations, hidden subsidies and other buried incentives that advantage fossil fuels and renewable energy in Australia. Here is a list of some examples: https://bravenewclimate.com/2010/01/31/alternative-to-cprs/#comment-86256 And here is a list of some of the government subsidies for different generation types for the USA, Texas: http://www.window.state.tx.us/specialrpt/energy/subsidies/index.php . This does not include the major component of the subsidies for renewables such as feed-in-tariffs, Renewable Energy Certificates, and the higher price renewables receive because the power generated by renewables is mandated, or as often referred to in the industry, ‘must take’.

9. I assume the community will accept that we need to provide a business and political climate for investors such that we minimise the investor risk premium for nuclear.

Effect of the policy on Capital Cost on Nuclear and Coal

Based on the above assumptions I calculate the capital costs of nuclear and coal power stations in 10 years from award of the first contract for NPP in Australia as follows (in 2009 $):Nuclear:

Starting price for nuclear = $3,800/kW

Reduce by 15% over 5 years (say 25% over 10 years) = $2,850/kW

Remove the investor risk premium of say 25% = $2,300/kWCoal:

Starting price for new coal = $2,100/kW

Reduce cost by 1.5% over 10 years = $$2,070/kW (ACIL-Tasman for 2025)

Add investor risk premium to coal (of say 25%) = $2,600/kW

How much subsidy would be needed to get nuclear started?

Starting price for nuclear = $3,800/kW

Starting price for new coal = $2,100/kW

Difference = $1,700/kW

However, nuclear has lower fuel and operating costs than coal, so allow (rough guess) $300/kW.

Therefore, the subsidy needed for the first plants would be $1700-$300 = $1,400/kW.

This would reduce to zero by say the 8th reactor, so the average would be $1,400/kW for the first 4 reactors and $700/kW for the next 4 reactors.

Many argue we should impose a carbon price first and then, as energy prices increase as a result, people will be more receptive to nuclear power.

I find this argument unconvincing. My reasons for rejecting this argument are:

1. Past experiences suggest that once the public feels an issue has been resolved they switch off and don’t want any more to do with it. Examples are:

a. The Petroleum Resource Rent Tax (PRRT) in the early 1990s. Once it was implemented, some changes were needed but no one wanted to open it up again.

b. Australian Republic – once the referendum was held it is off the agenda for a decade at least.

c. Several other examples that have slipped my mind for now.

2. If we put a price on carbon the public will feel Climate Change has been resolved and there will be a reluctance for a long time to consider nuclear.

3. New gas generators will be the easy answer for a decade at least. The public will not want to consider nuclear when they have been led to believe a carbon price, energy efficiency, gas generators and renewables will solve the problem.

4. The time to tackle the opposition to low-cost nuclear is now! The main opponents are the Greens, the ‘environmental NGO’s, Labor Party and its supporters, the gas industry, renewable industry, those who will gain from carbon trading and all those thousands of climate change and renewable energy researchers who are on the public payroll and whose careers depend on government funding.

5. Once a tax is imposed it is seldom removed. Many ‘temporary’ taxes have been imposed, but getting rid of them is nearly impossible.

6. A carbon tax is a case of picking winners. It is the flavour of the decade as to what we should tax now (mining, carbon, alcopops, flood levy), and which environmental problem is considered the most important at the moment. Next decade it will be something else.

7. The Green-Labor advocacy for a carbon tax is another symbolic gesture as opposed to good, substantial policy.

8. Carbon price is part of a more important Green-Labor agendas such as wealth redistribution (we have a whole tax system for that)

9. The people who advocate a carbon pricing scheme, while also opposing low cost nuclear, seem to not recognise the economic consequences of the policies they propose.

10. The argument being put for a carbon price is being put by various groups including those who want

a. gas

b. renewables

c. carbon trading

d. another symbolic gesture to show they’ve achieved something

e. any alternative rather than look seriously at what needs to be done to allow nuclear to be cheaper than coal in Australia

This last point (anything other then remove the mass of legislated, regulatory and policy impediments to low-cost nuclear) is the ‘elephant in the room’. It is the unmentionable issue. The one issue no one wants to discuss in any depth

As noted by Mr Lang, France now has the lowest carbon footprint in Europe, all without any need for a “price on carbon” or ETS’s. Why can we not do the same here?
NB Thanks to Graham Palmer for his response to my post on 14 September 2011 at 1:23 PM. and the interesting document he linked to.

Since we have discussed Australia’s proposed ETS (it’s not really a carbon tax) at some length, it may be helpful to review what an ideal carbon tax would look like. Or, in concrete terms, how should a US carbon tax be structured?

Here are some underpinnings, presented by one of my nation’s most influential economists, Greg Mankiw of Harvard University:

Australia should not implement carbon pricing until two conditions are met:

1. Australia has removed all the impediments to low-cost nuclear energy and has moved to accept and fully endorse the move to low-cost nuclear energy; and

2. The countries that emit as much as or more CO2e than Australia have implemented a legally binding, international, economically efficient emissions trading system.

I recommend Australia needs to establish a policy to implement low-cost nuclear energy with the objective of it providing in the order of 80% of our electricity generation within three to four decades from now.

The article in the Australian itself has questionable assumptions. Carbon permits are not like flexible irrigation licences; from the word go the intention is the number will be steadily reduced. From 2015 they will be bought not issued. Like musical chairs from then on there will be competition for the dwindling number so there is no case for compensating emitters for any presumed ongoing entitlement.

I agree the Treasury modelling may be suspect. For example the wind industry said it wanted $40 carbon tax so the modelling may assume $23 delivers a little over half of that wind build. Don’t think so it means the wind build stops dead without continued quotas and subsidies. That’s undoubtedly why the advice of Garnaut and the Productivity Commission to discontinue the MRET post c.t. was ignored.

I also agree that barring recession we won’t meet the interim target without some jiggery pokery like foreign offsets. That could sharpen everybody’s thinking. Think of it as a boil that will come to a head.

I agree with your comments that the carbon tax cannot make wind and solar viable and they are dependent, entirely, on being mandated by the RET. This is bad policy as Garnaut and the Productivity Commissions made clear.

I agree that we cannot achieve the 2020 emissions targets without ‘jiggery poky’. However, I sense you are underplaying just how serious this ‘jiggery pokery’ would have to be to achieve the targets – and how serious the consequences would be for the economy (see “What is the Cost” section in the submissions). Let’s face it, it’s now too late for nuclear to have any input to cutting emissions by 2020. So the target of 5% cut by 2020 is no longer achievable (being realistic). What we need to do is to focus on implementing nuclear asap so we can implement policy that can cut emissions, from energy alone, by 50% by 2050.

I agree the Treasury modelling may be suspect.

The Treasury modelling is worse than suspect. The assumptions are highly optimistic:

Unrealistic assumptions are:

1. The world will quickly adopt an international CO2 emissions trading scheme

2. Australia’s ETS will integrate successfully with whatever international scheme is adopted.

3. Australia can set an example to the world and other countries will follow our example.

4. International emissions permits purchased by Australia will be cheap, free of fraud and will be effective at cutting world emissions.

5. Cutting world CO2 emissions will produce the benefits assumed.

6. The assumed benefits can be achieved more cheaply by cutting CO2 emissions than by adapting to climate change, whatever the climate changes may be.

However, I think you may have misunderstood the really important point in Henry Ergas’s article. You say:

Carbon permits are not like flexible irrigation licences; from the word go the intention is the number will be steadily reduced. From 2015 they will be bought not issued.

But this is not the issue. The issue is the legislation locks in future governments, of whatever stripe, to incur massive cost to amend or repeal the legislation. That is clearly the intention of the Greens and the government. But is it based on an arrogant belief that they know what is best for the future forever more? That is extremely bad risk management, especially so given where the world is heading at the moment.

Henry Ergas explains it much more clearly than I can. I’d urge you to re-read his article. This is really important for Australia’s future.

You can’t have carbon pricing and regulations without high compliance costs. First, there is the cost of the bureaucracies (DCCEE, Treasury, ATO, DRET, DFAT, ABS, ABARE, Australian Federal Police, etc). Second, there is the cost to the companies involved – monitoring, calibrating, reporting, auditing, responding to requests for more information and defending their position in court. Third, there is the accounting, legal and litigation costs. Then there is the cost of fraud. Who pays all those costs in the end? The consumer of course.

If you don’t implement proper compliance systems, then the fraud increases, until the whole system fails or has to be changed. The cost is huge.

To give this some perspective, the USA EPA has admitted in a court submission that the cost for the EPA to implement the US regulations, that currently exist, to monitor CO2 emissions, would require them to hire 230,000 extra full time staff (up from 17,000 now to 250,000), and the cost would be $21 billion per year.http://www.eenews.net/assets/2011/09/16/document_pm_02.pdf#page=48

Sources needing operating permits would jump from 14,700 to 6.1 million as a result of application of Title V to greenhouse gases, a 400-fold increase. … Hiring the 230,000 full-time employees necessary to produce the 1.4 billion work hours required to address the actual increase in permitting functions would result in an increase in the Title V administration costs of $21 billion per year.

That’s just the cost for one government department. The cost to business would be at least 10 times more.

Assume the cost in Australia is 1/10th the cost in the USA. The cost to the government would be $2.1 billion per year and $21 billion to business. That’s 23 billion of totally unproductive money sucked out of the economy.

Well, one thing we could do with $23 billion per year would be to build four to five nuclear power stations per year initially and increasing to about ten per year. We could have enough to meet Australia’s electricity in a decade or so from start of first construction (I am considering funding constraints only here, not the logistics and other constraints).

I recognise many will not agree with the $23 billion per year compliance cost figure nor that what is avoided in compliance with the Carbon Tax and ETS can be converted to building nuclear power stations. But this does give a perspective on the waste the carbon tax and ETS will cause.

For those who disagree with the figure, please give a better figure and justify it.

I expect people are watching and reading the posts on this thread, but don’t want to debate this subject, the key policy issue of the time because the arguments against the government’s proposed carbon pricing legislation are becoming so ovewhelming.

The more I think about the cost of compliance (whatever it turns out to be it will be far more than the government would recognise at this time) the more it makes “direct action” to cut emissions look like the better alternative. Direct action to remove the impediments to nuclear as a first step and, if necessary, mandate electricity generation that cuts emisisons from electricity at least cost ($/tonne CO2e avoided).

Sure, we can follow with CO2 tax and/or ETS later. But, until there is an international system, any international trading will be enormously costly (compliance costs) and fraught with fraud. So how much can the CO2 tax and ETS achieve in Australia without causing a deep, long recession. Not much. In the absence of an economically viable alternative to fossil fuels, the carbon tax cannot achieve much. But it will cost us a fortune.

Peter Lang, on 30 September 2011 at 10:16 AMAssume the cost in Australia is 1/10th the cost in the USA. The cost to the government would be $2.1 billion per year and $21 billion to business.
Only 500 businesses are going to be monitored and I dont think CO2 emissions are being measured, but instead oil, gas and coal consumption. Methane emissions from coal mines will be measured.

I doubt that compliance costs in dollar terms will be a problem. I think c.t. will be beset with political problems due to glaring anomalies. For example the cushy treatment given to supposedly trade exposed industries while small local manufacturers struggle to pass on higher costs. Another anomaly will be selling coal and LNG to other countries with no intention of practising emissions restraint. There will be a justified outcry over the purchase of bodgie foreign offsets when we fail to meet interim targets.

However all of this is bringing matters to a head earlier rather than later. A period of somewhat ineffectual carbon pricing should silence critics who say we haven’t given efficiency and renewables a good go. At the same time the public will observe climate change and stumbles at nuclear phaseouts. Under the circumstances (Fukushima etc) things could be worse.

It is true the government claims only 500 business will be monitored, initially, and emissions are not being measured in Australia – yet.

However:

Firstly, that won’t last. If the USA and EU are monitoring emissions (as they are attempting to do) we will have to also. It is clear from the USA and Irish CO2 emissions monitoring from electricity generation, that the emissions monitoring is improving but not yet good enough to be able to establish how much emissions are avoided by wind generation. Clearly, to improve our ability to make such assessments (for fact based decision making), regulations will be tightened over time and emissions measurement will be required.

Secondly, we are starting with 500 businesses being monitored. This will extend to tens of thousands eventually as the scope of emissions trading is extended to more business and industries – such as agriculture, biochar, etc (if the world goes down the trading route).

Thirdly, if we don’t measure emissions, how can we tax or trade emissions?

Fourthly, if the compliance cost for the US EPA would be $21 billion per year if it applied the currently existing regulations, imagine what the cost will be as the regulations are tightened over time and extended to more businesses and industries. Furthermore, add the cost for the other departments. Departments that would be involved in Australia (of the top of my head) are:

Fifthly, there is the compliance cost to the businesses that have to comply. The compliance cost for each business – of which there will be 500 initially and extending to many thousands later – will be orders of magnitude more than the cost to the departments (per submission). Businesses have to:

• Establish the monitoring system for their business [1]
• Procure and install the system
• Take reading every 15 minutes, calibrate the instruments for every reading, summarise hourly and report the hourly readings, summarised to various levels [1]
• Maintain the system [1]
• Update the system, including all the IT systems, each time the regulations change (this has been happening every 3 to 5 years since 1993 for monitoring of the other gases covered in the same regulations [2]
• Modify the system when their business changes, (including when it merges with other companies, gets bought etc).

Has anyone who is competent and impartial – i.e. other than the CO2 Tax and ETS proponents – done a proper estimate of the economic cost of compliance?

The US EPA has, for just one department, and it is $21 billion per year! The total economic cost to the country would have to be at least 10 times that cost – more than $210 billion per year. Compliance costs are a totally unproductive use of the country’s capacity. Surely, “direct action” to cause roll out of nuclear power would be a far more cost effective way to reduce emissions, yes? (Just the EPA’s component of $21 billion per year would pay for about 5 GW of new nuclear capacity per year!)

However all of this is bringing matters to a head earlier rather than later. A period of somewhat ineffectual carbon pricing should silence critics who say we haven’t given efficiency and renewables a good go. At the same time the public will observe climate change and stumbles at nuclear phaseouts. Under the circumstances (Fukushima etc) things could be worse.

Your argument is highly irresponsible. You are arguing to seriously damage the economy to prove a point. You argue we should damage the economy to prove a point (which in effect is renewables are not viable, we must implement nuclear, and CO2 Tax and ETS cannot be effective without an economically efficient, international trading scheme).

Peter by ‘ineffectual’ I mean neither good nor bad. The compliance cost should be a lot less than the GST by that I include CO2 monitoring of a few hundred companies, revenue adjustment and so on. What we don’t know yet is if the ‘carbon cops’ have the cojones to shut down a business that didn’t pay its carbon tax.

One standoff I’m expecting is with brown coal in Victoria. The Vics don’t appear to have any real intention of going low carbon so the TV reporters will show the Melbourne single mums who can’t pay the power bill and the Latrobe Valley football teams whose very existence is threatened. This time next year it will be prime time TV.

If Australia doesn’t have leverage to influence international carbon flows I don’t know who does;
– we are the OECD’s biggest per capita emitter
– we will be badly affected by climate change
– we are the biggest coal exporter
– we will become the biggest LNG exporter
– we have the most uranium and thorium.
Therefore the line ‘not our problem’ doesn’t wash with me.

You seem to be dodging the key points and making up points you’d prefer discuss. Most of your last comment seems to have come out of the blue. What are you responding to, or are you just making stuff up to divert the discussion.

The key point above is that the USA EPA has estimated its compliance cost at $21 billion per year if the current regulations were followed. We do not have any better estimate. It highlights the enormous amount of work, and the number of full time staff that EPA would need to handle it. Your unsubstantiated opinion is just that.

Can I suggest you address the issues I’ve raised in the posts above and please quote the specific section you are responding to.

Comparing the compliance cost for CO2 emisisons trading with the GST is not valid. We already had an accounting system in place that just had to be modified for the GST. We can’t even measure CO2 emissions. The point is, if the EPA has estimated $21 billion for its small share of the compliance cost, then the total cost huge. And it will keep getting bigger.

The more you look at the governments CO2 Tax and ETS proposals the more obvious it becomes that direct action (e.g. do whatever is required to roll out nuclear) is the better way to cut emissions, fastest and at least cost. The CO2 Tax and ETS are aimed at improving efficiency, but this can have only a second order effect.

I am not sure what your comment is in response to. I didn’t say any such thing. What I’ve been arguing is that the CO2 tax and ETS will not change world emissions, nor change the climate, nor achieve any benefits, but will seriously damage Australia’s economy. Therefore the proposed CO2 Tax and ETS are bad policy and should be dropped. I think this is now widely recognised. I’ve summarised the argument here:https://bravenewclimate.com/2011/07/06/carbon-tax-australia-2011/#comment-136435

Here’s what I think the US should do: 1) Implement a moderate, steadily rising carbon fee applied at the mine, well or port. 2) Give full refunds to poor and middle class, on an equal, per capita basis. 3) Use the revenue from the wealthy and corporations to lower taxes on capital gains and corporate income.

Substituting a consumption tax (the carbon fee) for highly distortionary taxes on capital should increase economic efficiency.
So this approach should not harm the economy, and would probably help it, even apart from the climate benefit. It’s a no-regrets policy for both the right and the left.

“An upstream carbon tax would be relatively straightforward to administer with a small number of filers responsible for remitting tax revenues to the government. Ease in administration would help keep administrative and compliance costs down.http://pdf.wri.org/Brookings-WRI_GreenTaxSwap.pdf

The compliance cost for CO2 tax and emissions trading schemes would be very high as recently revealed by the US EPA. The EPA has stated in a court submission that the cost of complying with the existing US regulations for CO2 measurement would be $21 billion per year. That’s just EPA’s cost. I’d expect the cost to industry would be at least 10 times the EPA’s cost.

Now, imagine the cost to try to roll out such schemes across all countries.

It is clear the scheme is not viable.

Far better would be to save all the costs of trading, compliance and fraud by going straight to direct action. Direct action to get the world’s electricity generation to 75% nuclear (Like France is now and has been for about 30 years, but using small nuclear power plants built in factories and shipped to site).

If the money that would be needed for compliance monitoring was spent on nuclear instead, USA electricity generation could be near emissions free within 20 years (from a purely financial perspective; logistics and other constraints ignored).

The key issue is: you can’t tax or trade something if you can’t measure it. Therefore, we need to measure CO2e emissions. You can’t expect to establish international systems to price CO2e emissions if you can’t measure the emissions.

“Today, I will concentrate on the major issue of today–the form of economic push that is most likely to succeed. I will maintain the minority opinion that carbon taxes are better than carbon trading and that a particular form of it is vastly superior as an effective, credible, long term form of economic push.”

As for measuring CO2 emissions, a carbon tax should be applied upstream to all fossil fuels–a relatively simple affair. No one has to measure, record or report actual emissions downstream.

Internationally: “A global carbon tax would be easier to negotiate. All governments require revenue for public purposes. The world’s nations could agree to use a carbon tax as one instrument to raise some of that revenue. No money needs to change hands across national borders. Each government could keep the revenue from its tax and use it to finance spending or whatever form of tax relief it considered best.” N. Gregory Mankiw, “One Answer to Global Warming: A New Tax”

This is what most nations should do, and what I think the US, in the end, will do.

I try to focus my discussion on an ideal carbon tax, and the proper course of action for the US, my country. But I hope this discussion has some relevancy for Australia, too.

While I agree with carbon tax and the ETS some key aspects need fixing. One is the use of carbon credits or offsets that are potentially fraudulent. When Treasury say carbon pricing works out cheaper than direct action I think that assumes there will be plenty of cheap offsets on the market. This was discussed on ABC Latelinehttp://www.abc.net.au/lateline/content/2011/s3331367.htm
as well as carbon credits for conserving the Amazon rainforest. If it’s true that Tasmanian forests actually store more carbon per hectare this time we have a sense of ecological inferiority, not the more usual cultural inferiority. Maybe the fact distant forests are harder to see up close helps the mystery, a bit like an internet chatroom.

Most claimed offsets fail simple criteria
– the emissions cut should be globally new
– they should be measurably permanent
– the cut must be from a flat, not growing baseline.
Thus a synthetic tree that turned sunlight and CO2 into graphite might qualify as a carbon credit. However real tree planting, tree non cutting down, new wind and solar, CFC switching, methane flaring and so on all fail one or more criteria.

Thus I believe trading in carbon credits is not only a delusion but a massive scam.

You seem to have missed the point of my comment. The point is that neither your Green Employment Tax Swap, nor Hansen’s proposal, nor many others that have some advantages are the options being seriously considered by governments. The options are CO2 Tax transitioning to an ETS (with 66% of permits bought overseas) or direct action.

It is becoming clear that direct action is the best alternative. In fact, I suspect, deep-down, most here recognise it is the best way to cut emissions significantly. By direct action I am referring to doing whatever is necessary to allow us to have low-cost, low-emissions electricity generation with currently available technology. To me that means do as I explained here https://bravenewclimate.com/2011/07/06/carbon-tax-australia-2011/#comment-136436 Others will have other ways they believe is the best way to implement direct action. But direct action is the way to go, not Carbon Tax or ETS, at least not yet.

The international trade in emissions is simply not viable at the moment. The fraud will be enormous and totally uncontrollable. It is already significant. It was reported a few days ago that Norway had paid Indonesia not to cut down forests. The Indonesian’s took the money, cut down the forests and mined the area for coal (it has been reported). There’s been billions of Euro fraud in the EU trading scheme. And today there are reports of mass killings in Honduras [1] and “Armed troops acting on behalf of a British carbon trading company backed by the World Bank burned houses to the ground and killed children to evict Ugandans from their homes in the name of seizing land to protect against “global warming,” [2]. Whatever the truth of these stories, they are just the beginning of what will happen with international permit trading. It is totally impracticable at this time.

So we are in agreement that the ETS (Cap and Trade) is bad policy. However, that is what our government is intent on legislating. The legislation is in the process of passing through parliament now.

I don’t agree with the carbon tax either, at this stage. Not until we removed the impediments to low-cost nuclear and there is an international agreement on how to cut emissions. In the meantime I am persuaded the best option is to follow the “Direct Action” approach. I laid out a plan with a program here https://bravenewclimate.com/2010/01/31/alternative-to-cprs/ . I maintain that is still what we should do.

Ziggy points out “Australia’s purchases of carbon credits on the international market [would have] a cumulative cost of more than $600 billion (at constant 2011 dollars)” by 2050.

Still, a troubling question remains: is this the best way to spend all that money?

…

Why send money offshore when we could invest in a program like the Manhattan Project in Australia aimed at transforming our energy infrastructure? Think of what you could do with an extra $600bn across 40 years.

…

Finally, for much less than $600bn Australia could have a national network of nuclear power stations to provide 100 per cent of our electricity needs safely and cost-effectively with near zero greenhouse gas emissions. There’d be money left over to build a central repository for spent fuel and other nuclear waste as well as to start an enrichment industry, and to buy and maintain nuclear submarines.

All our stationary energy emission targets would be easily met, and society and industry would have something to point to for their dollars. The intensity of the political debate and media commentary reflects an assumption that climate change is the headline issue of modern times. But is it, and how might all that effort and money be better allocated? I think that’s a debate worth having.

In other words: “Direct Action” is the best way to reduce emissions.

We could have 30 GW of nuclear, enough to supply the NEM’s current average demand, for about $120 billion (in 2011 dollars). So there would be a lot of change out of $600 billion.

By 2020 we’re trying to get down to under 500 Mt net CO2e from all sources. Our exported fuels will produce over 700 Mt of CO2 in 2011 alone. Something to think about when you turn off that extravagant second fluoro light.

I expressed this idea on another thread, but it’s more appropriate here. Once Australia has a carbon tax in place, it can ask its exporting competitors like Indonesia and South Africa to cooperate in placing a carbon charge on exports, up to Australia’s domestic rate. The competitors will have an incentive to do so because they will make more money.

Once this is done, importers such as China will have an incentive to start their own domestic carbon tax to get the carbon revenue for themselves.

You suggest the carbon tax could be the quickest way to get nuclear started in Australia. That’s been addressed and debunked repeatedly on the “Alternative to Carbon Price” thread, and also on this thread. Some links are in the “Attachment 1”

You linked to Barry Brook’s comment of 1 Feb 2010 which supports the Hanson proposal:

Further to what Douglas says, why wouldn’t an internal (domestic) fee and 100% dividend approach to a carbon price, with the fee refunded/waived on exports and imposed on imports (from/to countries without an equivalent price) be effective in: (a) encouraging energy efficiency [prospect of direct personal/individual savings] and (b) discourage the construction of any new coal-fired power stations and provide a strong incentive for the government to put nuclear power on the table?

Occasionally people express the view that Australia is a hypocrite with its ongoing fossil fuel exports in the face of a domestic carbon tax. I think that’s far too polite… we’re A-grade bullshitters.

Well, I’d agree “we’re A-grade bullshitters”. On many matters. But not necessarily those you think.

You have brought up the issue of taxing or restricting our coal exports many times before. Each time it has been refuted. But then you say it again. It is hard to make progress under such a situation. It is an impracticable suggestions for many reasons:

1. The coal would be bought from other countries, so would not make any difference to the amount of coal burnt. But it would severely damage our economy (that means fatalities in the population to make this absolutely clear), for no benefit.

2. If we unilaterally stop or restrict exporting coal, someone will come and take it. Blocking energy causes wars (Japan entered the world war because their oil supply was cut off).

3. At an earlier stage, if we block energy exports there would be trade repercussions. It would be a downward spiral from there.

4. We’re not going to unilaterally cut back on $13 billion per year export income without it being absolutely clear it is to our benefit to do so. Most people realise it is not. There is much more at stake than just CO2.

5. For the other reasons, look back the answers to the other comments where you’ve raised this point.

Cutting off energy supply is not the right solution. The right solution is to allow a low cost alternative to fossil fules. We have the solution (nuclear) but it is banned in Australia and expensive in western democracies due to politics and 50 years of anti-nuke activism by the same groups who want to lead us into more bad policies.

Once Australia has a carbon tax in place, it can ask its exporting competitors like Indonesia and South Africa to cooperate in placing a carbon charge on exports, up to Australia’s domestic rate. The competitors will have an incentive to do so because they will make more money.

Once this is done, importers such as China will have an incentive to start their own domestic carbon tax to get the carbon revenue for themselves.

It is naive to believe that Australia can set an example that the world will follow. International trade and diplomacy don’t work like that. Each country is looking after its own interests and will grab any advantage it can get. The main reason EU was so keen on the ETS was to try to get an economic advantage over the USA. USA is not so dumb to fall for that – luckily for all of us.

If neither USA nor EU can get their way, what gives you the idea Australia could?

I’ll make a few quick points, then let you have the last word for a while.

A carbon tax/ETS is being seriously considered, and will make nuclear relatively more attractive compared to coal. This is true even for the flawed policy being proposed.

What you propose–direct action to introduce nuclear–is not being seriously considered, so far as I know.

Moreover, direct action has a fundamental flaw. According to economic theory, it is in fact the worst kind of policy to adopt.
Even thirty years ago, Milton and Rose Friedman wrote, “Most economists agree that a far better way to control pollution than the present method of specific regulation and supervision is to introduce market discipline by imposing effluent charges.” Free to Choose, 1980, p. 217.

I hope that eventually you will support both a reasonable carbon tax and the removal of impediments to nuclear, as these steps are synergistic. But for now I wish you the best of luck pursuing the latter.

Peter I think it’s a bit disingenuous to suggest emissions created to make exports like aluminium are not our responsibility. We all benefit so we all have to take some blame. I’d need to see how IPA’s alternative averages are derived to make sure they are consistent. Their conclusion sounds too convenient. They might conclude Saudi Arabia has a low carbon economy since they export so much.

The notion that sellers take some blame for harm caused to or by the customer is why it is illegal to sell alcohol to minors. Australia is peddling a harmful product, namely fossil fuel, to irresponsible buyers. Asian steel mills would probably have to go Africa for coking coal. We’re right on their doorstep with a number of loading ports, and building more. To back it up I’d carbon tax finished goods like steel on import. If Australia clubbed together with Europe and Scandinavia to do this we could make a substantial difference to world carbon trade.

All of this seems a bit abstract now but will reach a crescendo in 2015 when we move to a CO2 cap. If we have to cut CO2 by x% at home the rest of the world is supposed to cut x% as well. To me that means that coal and LNG industries must then start declining ie negative growth after 2015. Even Tony Abbott acknowledges this.

Thank you for the comments. I mentioned to you in an earlier comment, you do not need to explain the theory. I’ve been involved and following it since 1991.

Your “new” points have all been addressed up thread. Please read the comments that have already been made on this and the “Alternative to Carbon Pricing” thread.

What you propose–direct action to introduce nuclear–is not being seriously considered, so far as I know.

That is due to politics. Politics makes policy. So it is the politics we need to address, not put more plaster on top of already infested wounds. It is the political parties, and their supporters, that oppose nuclear that are causing the delay, and have been for 50 years. A CO2 Tax won’t change this. It will favour renewables and gas. You have to deal with the real issue, not another symbolic gesture.

The Opposition supports nuclear, but they cannot take the lead from opposition. UK is taking direct action to implement nuclear.

I don’t understand what your comments refer to because you don’t quote what you are responding to.

You said: “

Peter I think it’s a bit disingenuous to suggest emissions created to make exports like aluminium are not our responsibility.

Are you referring to alumimium made in Australia, or aluminium made overseas with electricity made, in part, from our coal? If you mean aluminium made in Australia, who said the emisisons are not included? Are you referring to the emisisons being not included in Australia when CO2 emissons are accounted under a production or a consumption scheme? If so that is correct. You need to make clear what you are referring to.

This comment applies equally to the rest of your post. I can’t guess what you are thinking.

Peoople who have been looking at consumption based schemes, like Warwick McKibbin, have explained repeatedly that it would be the better way to go from a technical perspective, and in that case, Australia would not be the highest emitter per capita. On a consumption basis we are not the highest emitter. I am surprised this is the first time you’ve come across this. It shows how a continuous flow of BS and spin baffles brains.

That’s your opinion, not theirs. It’s also not mine. Fossil fuels are an excellent product for humanity in the absence of something that can provide electricity more cheaply. We need to get that straigth from the get go. Idealism is not helpful. It prevents progress, as the idealism that has block nuclear nuclear and promoted renewable energy clearly demonstrates.

Peter the flaw in that submission is this; our leaders seriously believe that efficiency and renewables will replace fossil fuel. They will have to see this is not the case with their own eyes, Therefore Clean Energy Futures represents the learning experience we have to have, to borrow from Keating. When it disappoints after a couple of years they may be receptive to a submission along those lines.

Peter the flaw in that submission is this; our leaders seriously believe that efficiency and renewables will replace fossil fuel. They will have to see this is not the case with their own eyes,

That is an ridiculous argument. You are arguing we should, promote, encourage and endorse bad policy just so we can show how bad it is.

On that basis, why are you arguing for nuclear? In fact, why are you arguing to cut CO2 emissions? Why not just keep going indefinitely making the worst possible policies so we can prove they were wrong?

Can you not see how ridiculous that argument is? You’re really clutching at straws if that is what you are left with as arguments to support your side of the debate.

But, there is no substantial rebuttal of any of it. Just repetition of beliefs for the government’s proposal. Most people would have to wonder why the stubborn refusal to acknowledge the substance of the case against proceeding with legislating the government’s CO2 Tax and ETS.

The key points the submission (including the Addendum) cover are:

1. What is the benefit?

2. What is the cost?

3. Has due diligence been done?

4. What is the risk management strategy? (to minimise the cost to the taxpayer if the legislation has to be amended or repealed in the future?)

* By the way, Barry and others had asked me repeatedly to summarise the arguments I’d posted in the “Alternative to Carbon Pricing” thread because the thread became too long and too disjointed to follow. The submission does that. It doesn’t cover all points, but it does summarise many of the important points and included links to others and to back up for the statements made.

Peter I think the disappointments in store with the carbon tax must bring clarity sooner than later.

I certainly hope it is sooner rather than later; i.e., before we pass the legislation. As my submission states, and as many other people are pointing out, the cost to undo this legislation will be very high, very wasteful and very poor risk management practice. Here is one of the few of the 69 submissions, out of over 4000, that does not support the orthodoxy http://www.aph.gov.au/house/committee/jscacefl/subs/Sub048Barry.pdf . Dr Barry Golding makes the point in the last paragraph:

The Bills should be withdrawn. Since this is unlikely, the drafters should adhere to the precautionary principle and write the legislation in such a way that it can be easily dismantled if that is the democratic wish of Australians in the future.

They make the point c.t. is too low to make much difference.

It won’t make much difference to emissions. But it certainly will make a big difference to the economy as it is ramped up, which inevitably it will be. That is addressed in my submission (see up-thread) and in some of the other of the 69 accepted submissions. As this http://www.exeloncorp.com/assets/newsroom/speeches/docs/spch_Rowe_ANS_110815.pdf excellent presentation points out, the CEO of Exelon believes nuclear would need a CO2 price of $100/t to make new nuclear competitive in the USA now.

It gets worse when the ETS arrives since offsets are largely illusory therefore fraudulent.

Dead right on that. This will be massive. So why are you still supporting it.

At least we’re making an effort unlike the US.

Wrong! We are making the wrong “effort”. It is bad policy, very bad. It will do serious damage for no benefit. The best policy is to not lock ourselves into a Carbon price yet. Travel with the big players and allow ourselves plenty of room to manoeuvre. One submission, Exigency, points out that it is the BRIC countries that are doing 70% of the C trade. EU is third.

The EU, and the proposed Australian systems are a penalty systems. It could well be the world will not adopt the penalty approach but will adopt the incentive approach.

By “direct action” I mean remove the impediments to low cost nuclear. Establish the education facilities. Set up the regulatory regime. Instruct the Productivity Commissions to find the impediments to low cost nuclear, prioritise them in terms of their effect on the economy and their effect at preventing nuclear energy, and suggest the best way to remove all those that we should remove.

I thought this article was spot on

Fancy promoting another tax to fund more renewable energy research. How ridiculous. We’ve been doing that for well over 20 years. It’s time to stop all that nonsense. Adopt direct action. I do agree with this bit though (but not the following sentences):

There is a better way. Instead of trying to make fossil energy more expensive, Australia should work to make clean energy cheap.

That’s what I’ve been saying consistently for 20 years. But few seem to be prepared to accept it and almost none on BNC.

I have to comment on your referencing “Crikey”. You made a remark a few days ago dispraging “The Australian”, our only national newspaper and the only paper doing thorough investigative journalism. And yet you quote from “Crikey”.
The case could not be stronger that the proposed legislation is seriously bad policy. It will cost a bomb and damage the economy and all for no benefit.
I’d urge John, Barry and others who have been strongly supportive of carbon pricing to move your position on this. I’d suggest you move to supporting direct action along the lines I’ve been promoting for 2 years on BNC. The CO2 Tax/ETS is toxic and and needs to be recognised as such. We should do all we can to persuade the government to find a way to back down on this one.

BNC comments policy says one of the main aims of BNC is to work towards realistic solutions to cutting world GHG emisisons.

The Joint Select Committee on Australia’s Clean Energy Future Legislation was established under a resolution of appointment passed by the House of Representatives on the 14 September 2011 and the Senate on the 15 September 2011 to inquire into and report on the provisions of the attached bills.

The Committee invites interested persons and organisations to make submissions by Thursday 22 September 2011 . Please refer to our brochure called preparing a submission for more information. Please note that there are no terms of reference for this inquiry. [emphasis added]

In order to facilitate electronic publishing of submissions, the Committee would prefer them to be emailed to jscacefl@aph.gov.au or sent on disk or CD-ROM to the Committee Secretariat in Microsoft Word® or Portable Document Format (PDF).

Over 4500 submissions were received. However, the Committee has the power to decide which are “submissions” and which are “correspondence”. They decided only 70 were “submissions” and the rest were “correspondence”. Only those the committee deems to be “submissions” are published (and in reality only those will be considered).

Could that many Australians get it wrong? Clearly they were intending to make submissions to the enquiry – they were making submissions that they understood would be properly considered by the committee.

With that high a proportion getting it wrong, is it more likely that the committee’s selection criteria and selection process was not made clear beforehand.

There is no prescribed form for a submission to a parliamentary committee. Submissions may be in the form of a letter, a short document or a substantial paper. They may include appendices and other supporting documents.

Submissions should be prepared solely for the inquiry and should be relevant to the terms of reference. They may address all or a selection of the points outlined in the terms of reference. Submissions may contain facts, opinions, arguments and recommendations for action.

It is helpful if submissions are prefaced by a brief summary of the main points.

Supplementary submissions may be lodged during the course of an inquiry to provide additional information or comments on other evidence.

What was the selection process? Was it transparent?

Were all the submissions reviewed and compared against selection criteria?

Who actually made the decision about which to select and which to reject? Was it the committee or the secretariat?

Is the process that was followed in this case what open and honest government means?

Some of the 70 that were accepted as “submissions” do not appear to meet the requirements for a submission any better than mine does. For example, some were dated after the closing date for submissions. Many did not even mention any of the Bills.

It should also be noted that the Committee Chair Person is Labor and the Deputy Chair is a Green (Senator Milne). Normally, the Deputy Chair would be from the Opposition.

Can we have any confidence in the output of this committee?

The report has just been released and the Introduction now defines the “Terms of Reference”. These are an after thought. These were not provided before over 4500 Australians wrote their submissions.

The Introduction, paragraph 1.28, says:

A large amount of correspondence was received by the committee. These items were not received as submissions to the inquiry because they did not address the actual legislation being considered.

This is not true. At least 10 of the 70 accepted submissions did not mention the legislation.

An ETS is a dead end as environmental policy because, in my view, the world will eventually go with a straight, moderate carbon tax. John Newlands is correct that some environmental good will probably come of enacting an ETS. But Peter Lang is correct that the price economically (and politically) will be unnecessarily high.

I see an international CO2 cap as the only way to stop the growth of Australia’s coal industry until depletion starts to bite 20-30 years from now. The question is whether emitters actively undermine an ETS or the government is a weak umpire, A bit of both.

The correct CO2 price is that which puts us on the least worst path. As we shall see a carbon tax with renewables quotas won’t really change anything, particularly if nuclear is forbidden. Hopefully we won’t waste too many years on this approach.

I’d prefer a tough ETS with no freebies (e.g. bogus offsets, special exemptions) or renewables targets. CO2 permits should be auctioned up to the cap with the players fighting out between themselves for a share of the right to pollute. If they pay too much or too little that gets sorted out by trading. We’ll also find out how much commercial solar and wind power should go in the mix when there are no subsidies or mandates.

The prescription you offer is not bad: If the CO2 permits are all auctioned off, the ETS becomes a variable carbon tax. You might be interested in James Hansen’s take on a tax vs. an ETS, especially, their relative acceptability at the global level:

I received an email from the Joint Select Committee on Australia’s Clean Energy Future Legislation which states:

The committee has received your email as correspondence. While the committee considers the views in correspondence, it does not publish correspondence on its webpage. This does not lessen the importance of your contribution, however only those documents that went to specific detail about the Bills were published as submissions.

Their excuse for rejecting 98.5% of submissions (“only those documents that went to specific detail about the Bills were published as submissions”) is not correct as is shown by a quick review of the 70 accepted “submissions”.

The Bills should be withdrawn. Since this is unlikely, the drafters should adhere to the precautionary principle and write the legislation in such a way that it can be easily dismantled if that is the democratic wish of Australians in the future.

PL – not good. I’ve seen submissions accepted for a range of other inquiries that are written by concerned people, simply expressing a view, without any reference to formal guidelines or possessing professional qualifications or expertise. Isn’t this democracy?

Yet, curiously, some are simply opinion pieces like this one from Richard Davis:

Key Points
• The Carbon Pricing Mechanism runs counter to the international evidence in favour of incentive schemes and against penalty schemes
• The proposed scheme will penalise Australian manufacturers whilst paying incentives to their international competitors
• Electricity Prices could rise more than 6 c/kWh relative to current prices without changing the carbon intensity of the generation mix
• The lack of key energy market reforms restricts substitution or other relief from energy price imposts
• Subsidies for renewables must introduce a location-specific carbon price to avoid inefficient capital allocation and/or spinning reserve costs of displaced generating capacity
• Buy-outs of fossil generation capacity might lead to demand being met from existing, high emissions intensity capacity
• Modelling of international abatement credits needs to factor price impacts of “disallowed” credits and additionality risk (ie payment with no environmental gain)

Their submission is interesting. It says the EU and Australia ETS schemes are out of step with where the major carbon markets are heading. If this is true, we need flexibility to be able change our scheme in the future. But flexibility is something the government is trying to avoid. The government is doing its best to lock us into their scheme and to maximise the cost of changing it. They seem to think they know what is best forever, (deleted personal inference)

Paul Kelly, Editor-at-large for The Australian, had an opinion piece on Oct. 15 entitled “Carbon tax triumph divides a nation”. Much of it focuses on politics, but I’ll present a couple of points he makes about policy here.

“[But]…this scheme is a flawed exercise in carbon pricing. It represents compromise piled on compromise. It is a hybrid of market forces and government intervention riddled with contradiction. It will almost certainly require revision….”

A fair assessment, in my book. But flawed as it is, Australia’s carbon price should start to have positive effects, including an intensified re-evaluation of nuclear. Martin Nicholson’s recent post may show that this process is already beginning:

John Newlands, You have posted repeatedly that you believe a ct is a step in the right direction but have generally failed to provide any substantiation for your personal opinion. You have repeated your unsubstantiated personal opinion in numerous comments (most of your comments) on this thread.Perhaps you would like to read and address the substance of this: https://bravenewclimate.com/2011/07/06/carbon-tax-australia-2011/#comment-136435 and the following comments.

If you think the CT is a step in the right direction you need to explain what are the costs and benefits. You need to be able to answer these questions about the benefits quantitatively, not just with airy-fairy unsubstantiated personal beliefs:

1. Will the CO2 price, applied in Australia, change the climate? If so, by how much?

2. Will a CO2 price, applied in Australia, reduce world emissions? If so, by how much?

3. Will the CO2 price have an effect on the ecology of Kakadu and the Great Barrier Reef? If so, by how much?

4. Will the CO2 price change the rainfall in the Murray Darling Basin? If so, by how much?

5. Will the CO2 price have an effect on sea level? If so, by how much

6. What will be the total cost of administering and complying with the scheme?

7. How will the emissions avoided (e.g. by wind farms) be measured given we have no way of measuring the emissions avoided by wind farms. (Australia does not measure CO2 emissions from power stations)

8. What will be the effect of changing assumptions – such as when the government is eventually forced to recognise that wind farms and solar energy avoid far less emissions than the government’s and Green’s propaganda would have us believe.

9. How much fraud will there be with CO2 trading in Australia? Who is the ultimate victim of the cost of such fraud?

10. How much fraud will there be with our purchasing of international carbon permits? Who is the ultimate victim of the cost of such fraud?

11. How can we expect to prevent carbon trading fraud in Australia, let alone in international trade of carbon permits, given we can’t even control internet scams and fraud now?

12. What is the benefit? What is the cost?

13. Is the Carbon pricing scheme simply “Socialism dressed up as environmentalism”?

14. Do we really want to go down the path of economic destruction that the EU has pursued?

Yes. That is one article supporting the Carbon Taa. There are many others that show it is very bad policy. Paul Kelly is a strong advocate for Labor, so I’d read that article with that perspective in mind.

You said:

A fair assessment, in my book. But flawed as it is, Australia’s carbon price should start to have positive effects, including an intensified re-evaluation of nuclear. Martin Nicholson’s recent post may show that this process is already beginning:

If you think it will have positive effects I’d suggest you need to be able to say why and quantify your answers. Perhaps you’d like to respond to the questions in my comment to John Newlands above about the commonly stated benefits.

You are quoting opinion pieces selectively. We all know that the Australian has supported a carbon price all the way. We also know they have published both sides of the argument. The arguments against an Australian carbon price in the absence of an international agreement are overwhelming.

My comment at 22 September 2011 at 10:51 PM shows why an Australian carbon is really bad policy in the absence of an international agreement and before we remove the impediments to low cost nuclear. You appear to have not digested that comemtn in full, and certainly have not attempted to refute it. Nor has anyone else.

Before a competent government would propose legislation that will have massvie costs for Australia and Australians it should be able to answer these questions in an appropriately competent and quantitative way”

1. What is the benefit?

2. What is the cost?

3. Has due diligence been done?

4. What is the risk management strategy? (to minimise the cost to the taxpayer if the legislation has to be amended or repealed in the future?)

I’ve addressed these @ 22 September 2011 at 10:51 PM .

To date there has been no serious discussion of that let alone been been refuted. Perhaps you would like to take the whole comment (and the Addendum in the following comment) as one and argue why it is wrong.

It isn’t necessary to answer all your questions to arrive at a common-sense view of carbon taxes.

The majority of climate scientists agree that global warming is a serious threat. (It is also a given for BNC discussion.) And most economists agree that a carbon tax is a cost-effective way to control the threat.

The Australian agrees in their editorial stance: “As we have consistently made clear, The Australian supports a price on carbon as a mechanism to reduce greenhouse emissions. Ms. Gillard’s package broadly acceptable in that it seeks to minimise the impact on industry, and neatly compensates consumers through innovative changes to the income tax system. The scheme’s weaknesses are those imposed by the Greens: the focus on picking winners through the $10 billion renewable energy fund; and the requirement to fund industry compensation and clean coal research from the budget rather than carbon tax revenue.” Oct. 13, 2011 “Carbon tax uncertainty now certain to continue.”

Australia’s carbon tax is, most agree, flawed, and perhaps Australians will decide to chuck it. But the ideal of a carbon tax is harder to argue against.

Again, I’ll let you have the last word for a while, should you choose to comment.

Thank you for offering a right of reply to your comment. I shall accept your kind offer :)

Proponents of CO2 pricing do need to be able to answer the questions (@ 16 October 2011 at 10:48 AM). No competent government would implement a policy that will have massive economic repercussions (even Greens and Labor admit that) without being able to answer, convincingly, that the benefit exceeds the cost. The fact that no one here is prepared to try to answer these questions, seriously and quantitatively, is ample evidence that the claimed benefits do not exist. They are a fiction. You can realise that just by scrolling down the list of claimed benefits. I presume you did just that but like everyone else, preferred to not try to answer them.

The key point to recognise is that, in the absence of an international agreement, an Australian CO2 tax/ETS will not reduce world emissions, and will make no difference to the climate. Therefore, there is no benefit, but there is a very high cost. That should be abundantly clear by now; however, the CO2 price advocates are not yet ready to admit it. If I was wrong, the BNCers would have been out in force trying to dismantle the argument I’ve put repeatedly over the past 2 years. But it has been mostly avoided, and certainly not refuted.

ECONOMICALLY sustainable markets are built on the back of secure property rights, but because secure property rights cannot exist for greenhouse gases, emissions trading has a structural flaw that will ultimately unravel.

…

Emissions trading is a beautiful idea in economic theory. However, it fails the practicality test.

Markets are built on credible, tradable property rights. Physical property rights are definable and can be isolated for the purposes of ownership.

If the CO2 Tax/ETS advocates cannot answer the questions (@ 16 October 2011 at 10:48 AM) about the benfits, how do you, and they, expect to be able to convince a cautious population?

Avoiding questions you do not like will only persuade people that you do not have the answers. That convinces people that you haven’t a clue what you are doing and you do not realise the consequences of what you propose.

Peter I have to disagree on Australia’s influence on world carbon flows. CO2 from our domestic and exported fossil fuels accounts for ~1.5 Gt of about 30 Gt of global man made CO2. However Australia has only 0.3% of world population. Therefore there will be a leveraged effect if Australia makes a serious effort to decarbonise.

Secondly Australia could form an alliance with Europe and some Nordic countries to make life difficult for the nations you mention. For example an arbitrary 20% carbon tariff on all their imported goods. The US wouldn’t like it if a lot of its exports were slapped with a carbon tariff, Could the rest of the world retaliate? Not for long as we are the only country with 8 or 9 coal ports, a third of the easily mined uranium and half a dozen LNG trains under construction.. Yes it is Australia’s obligation to do something. We can and we should.

We’ve covered all this before, many times, on this thread and other threads. So I’ll summarise and will provide references to back up my statements if you ask for them.

Yes it is Australia’s obligation to do something. We can and we should.

Yes, but:

1. we should not implement policies or legislation WILL NOT achieve the stated objective but WILL damage the economy. Damaging the economy reduces people well being and makes us less able to take the correct actions. So it is immoral to do so IMO.
2.Doing something for the sake of just doing something, even when it is damaging and has no benefit, is silly. If it is doing damage as well, as the CO2 Tax and ETS will, is worse than silly. It is irresponsible.

Therefore there will be a leveraged effect if Australia makes a serious effort to decarbonise.

Too many unstated assumptions in this:

1 “There will be a leverage effect”. Can you demonstrate that, quantitatively?. I say this statement is complete nonsense. It is naïve.

2 “The CO2 tax will lead to a serious effort to decarbonise”. Can you demonstrate this assumption is valid?

3 “The CO2 Tax is the best way to decarbonise”. Can you demonstrate this assumption is valid?

Secondly Australia could form an alliance with Europe and some Nordic countries to make life difficult for the nations you mention.

John, you’ve repeated that statement a dozen times or more over the past two years. It is wrong. If you stop other countries having access to energy to meet their needs, they’ll come and take it. It’s happened before and it would happen again. Trade barriers are also against the WTO rules. The world is trying to remove barriers not increase them. If we want to ever get an economically-efficient, international GHG emissions trading scheme, we need to be working to remove all trade barriers, not increase them as you are proposing. The world needs to move towards free trade, not protectionism for many reasons – not least of which is to assist the developing world to develop faster and as a result, reduce its population growth rates.

For example an arbitrary 20% carbon tariff on all their imported goods. The US wouldn’t like it if a lot of its exports were slapped with a carbon tariff,

Don’t you think the USA would retaliate and slap quotas on our exports to them that would hurt us a lot more than it hurts them? Same for all countries. Suggesting trade barriers is nonsense (IMHO!!!, as well as in the informed opinion of Craig Emerson, Hawke, Keating and anyone who has any understanding of this subject).

Could the rest of the world retaliate? Not for long as we are the only country with 8 or 9 coal ports, a third of the easily mined uranium and half a dozen LNG trains under construction.

I think you may have forgotten something. Firstly, do we import anything we need? What if the supply of that was cut off? (think of the most critical item, because that is what the retaliators will look for). Can we be totally self sufficient? Secondly, you failed to compare the capability of our military against the military of the countries that desperately need to import our energy for the health and well being of their peoples. How long would they (in fact should they) delay before coming and taking it if we don’t back down?

John, please try to think a bit more broadly about the international consequences of erecting trade barriers – by whatever means.

(My)fundamental point (which) cannot be ignored, is that the Australian CO2 Tax and ETS will not cut world emissions, will not change the climate but will severely damage our economy. (This is) a policy that (I believe) can deliver no benefits but will cause significant harm to people (or at least it will reduce the rate that conditions can improve)

The editing is fair. However, it is a pity the equivalent editing is not done consistently for the many, many personal opinions expressed by most BNC commenters.

If anyone disputes this statement, please answer my questions quantitatively.MODERATOR
Most commenters express their opinions as just that i.e.their own opinions.You tend to state your opinions as undeniable fact. Please keep that type of opinion to the Open Thread.

I see Peter Lang’s quite justified complaint about the public submission and acceptance process for the Joint Select Committee on Australia’s Clean Energy Future Legislation has been picked up by at least one side of politics. From Keith Orchison’s recent Coolibah Commentary

The Coalition, in its minority contribution to the joint committee report, condemns the review process as “abused from the
beginning.” It labels the hearings “a farcical shotgun abbreviated
inquiry.”

The Coalition claims that the government/Greens approach to the hearings “makes a mockery of any claims to undertaking an honest assessment” of the bills. It accuses the Labor/Greens dominated
committee of opting not to accept the vast majority of 4,500 submissions on the legislation, merely receiving them as “correspondence.”

While woeful, it’s not at all surprising. Just look at what constitues public “consultation” in most cases where Government departments are involved, e.g. in the EIA process. Even if they’d accepted all 4,500 submissions, it’d still be tokenistic.

Thank you. It is good to see some other BNC contributors consider this matter is serious. (Deleted mistake)
Tom Keen, @ 1 November 2011 at 11:17 AM

Even if they’d accepted all 4,500 submissions, it’d still be tokenistic.

That is not a valid excuse. They called submission then rejected 98% of them, presumably because the response did not say what they wanted to hear. This is a serious abuse of process. Implementing legislation that will damage productivity and damage the economy (that is not disputed) for no environmental gain is incompetent and unconscionable. [If there would be an environmental gain then you and others would be quick to reply to my questions up thread, but no one has made any serious attempt to answer them]. This is very serious. People should be up in arms. If such incompetence was committed by the previous government, imagine the outrage from the proponents of this legislation.

It is interesting to note what the Canadian Foreign Minister said on Monday:

Canada blunts carbon tax case

Canadian Foreign Minister John Baird has cast doubt on the fundamental analysis underpinning Australia’s carbon tax policy, saying neither his nation nor the US would ever introduce an emissions trading scheme.

Mr Baird [said] he did not believe any effective carbon-trading system would come into effect.

The ability to trade greenhouse gas emissions, or carbon credits, is central to the Australian government’s carbon tax.

Under Labor’s scheme, Australia’s greenhouse gas emissions would continue to rise but the nation would achieve its carbon reduction targets by purchasing credits on an international scheme.

“I think there’s only one member of [Canadian] parliament who advocates it, and that’s the lone Greens member,” Mr Baird said.

His comments are devastating for the Gillard government’s proposed scheme, because if the US and Canada do not go down a market road for cutting greenhouse gas emissions, it is impossible that anything remotely resembling a global market could emerge.

Even more devastating is Mr Baird’s judgment that carbon-trading schemes are inherently unreal and non-productive.

We should not be assuming the CO2 tax and ETS will survive. I believe it is inevitable they won’t. The Australian legislation depends on an international trading scheme for about 66% of the emissions reductions. But it seems there is next to no possibility of an international trading scheme. This article is an expansion the previous one. It seems clear that the international ETS is going nowhere; so the Australian CO2 Tax and ETS is doomed.

It was wrong policy anyway. As I’ve said upthread, raising the price of electricity will do nothing to cut world emissions. The correct approach is direct action – including, direct action to remove the impediments to low cost nuclear.

And to qualify, I don’t see it as an excuse at all. I just have very little faith in public submission or consultation processes. Apathy is probably the best word for it. The now approved Upper Spencer Gulf desalination plant (tied in with BHP Billiton’s EIS for the Olympic Dam expansion) comes to mind.MODERATOR
Peter’s mistake was deleted.

Tom, Senate committees and Joint party committees are supposed to be the last stop to check out legislation before it is passed. They do an important job. This one was an abuse of process.

the committee for this important policy, which will have serious repercussions for Australia’s economy for the long term, was chaired by Labor and co-chaired by Greens. That is highly unusual. Normally the co chair would be a member of the Opposition. It is a demonstration that the whole process of getting this tax legislated has nothing to do with implementing good policy.

This particular product is one I actually buy as I use it to make biodiesel. If biofuels are ever to be viable they must free themselves from fossil fuel inputs and so far this seems impossible. The company claim they can’t compete with coal-to-methanol made in China. Presumably biomass-to-methanol is out of the current price range. Instead of special giveaways to trade exposed industries I suggest we need a carbon tariff.

Goods imported from countries without carbon constraints should be levied a commensurate penalty. I’m not sure what this would be on coal derived methanol but on aluminium made from coal fired electricity it could be on as much as 15t CO2 per tonne of aluminium. None if made from hydroelectricity. Therein lies the practical problem of individual commodity assessments. A better approach might be if the country of origin ticks several boxes such as Kyoto compliant then its goods are landed free. If not they are hit with an arbitrary carbon tariff, say 20%. That will hurt India and China until they sign up.

I think the carbon tariff is inevitable which is why China fears it. It will take a core group of countries based on the EU to start the ball rolling. This issue will crop up again in the next few years before the big shouting match over foreign offsets in 2015. Bring it on I say.

The carbon tax will have a vastly bigger impact on productivity, wages and the cost of living than “highly optimistic” Treasury calculations indicate, claims the Minerals Council of Australia.

The council will today release modelling it commissioned from the Centre for International Economics, which predicts that under the carbon tax gross domestic product will fall by $180 billion between next year and 2020 from a “business as usual” scenario – with no carbon tax – as opposed to Treasury’s estimated $32bn drop.

Ahead of Tuesday’s Senate vote on the legislation, the centre says real wages will be 1.9 per cent down on the business-as-usual scenario by 2020 rather than about 1 per cent lower, as suggested in the Treasury modelling.

The centre says Treasury’s calculations were based on a key assumption that there
But the centre says its own study is the first to assume global action on climate change is likely to be patchy and fragmented.

The centre’s modelling predicts average household earnings will fall by $11,360 by 2020, more than double the $5110 drop predicted by the government.

The council says electricity prices will rise by nearly 30 per cent by 2020, compared with Treasury’s initial estimate of about 10 per cent.

The centre predicts that productivity or output per worker will fall by 1.9 per cent compared with the business-as-usual scenario, rather than the 0.4 per cent in Treasury’s analysis. The council says the Treasury modelling also assumes that a world price on carbon will emerge by 2016 and that major developing nations will produce more emissions cuts than necessary in order to sell abatement to developed countries.
…

“This new work shows the costs of the carbon tax in the real world, not in some rose-coloured version that understates the costs to Australian industry, households and our long-term growth prospects,” Mr Hook said.

“The government’s modelling rests on the heroic assumption that there will be a global carbon price and international emissions trading in place by 2016.

He said just last week, Canadian Foreign Affairs Minister John Baird had described carbon trading as a giant “pyramid marketing scheme”.
On October 24, the US congress voted against participating in Europe’s trading scheme and on October 20 the Japanese government dismissed calls for a new global climate deal by 2015.

Chris Huhne, UK energy minister has not got a clue!MODERATOR
Kevin – please be mindful that this type of comment violates the BNC Citation Rule which asks for more analysis of the given link. Please check the About page for more information as to why this rule exists.

A recent paper in the Proceedings of the National Academy of Sciences shows that even if all the unenforceable pledges made in the Copenhagen Accord were honoured, carbon cuts by the rich nations between now and 2020 would be cancelled out by their imports from developing countries(5). In other words, nothing will have been achieved. Already, 16 billion tonnes – equivalent to 27 years of the UK’s emissions – have gone missing from the international system as a result of this false accounting(6).

Australia signed Kyoto just as the other countries were already recognising it was the wrong approach.

Today, Australia legislated its CO2 tax and ETS. But one gain Australia is out of step with the direction the rest of the world is heading. Today, Ireland decided to step back from the wrong headed policies the western world has been forced to implement by you know who.

A RADICAL shift in policy on climate change is to be outlined by Minister for the Environment Phil Hogan today, when he announces that a climate change Bill is not a priority.

It signals a major change from the policy of his predecessor John Gormley, who rushed to publish legislation setting binding statutory targets for emissions reductions in the weeks before the previous government collapsed last January.

Second, we should raise the carbon price gradually: say, $4/yr for two years and $2/yr after that. So the price would be around $20 in 2020. This schedule would yield significant long-term environmental gain for minimal present economic and political pain.

Third, as Australia has done, the poor and middle class should be compensated to hold them harmless. But the bulk of the revenue should be used to lower the most distortionary taxes. For the US, this would be taxes on capital such as capital gains, corporate income, and estates. The economy would not be hurt much by this tax swap, and could well be helped.

Huon tomorrow Obama visits Australia and apparently he is going to have Vegemite on toast for breakfast. If carbon tax in Australia goes OK and Obama gets re-elected you never know it could happen in the US.

In my opinion not much will happen either good or bad with carbon tax in Australia, maybe some belt tightening on power bills. In 2015 we are supposed to move to a CO2 cap with auctioned permits subject to a floor price. I’d prefer that but I fear that fraudulent offsets will undermine the ETS and renewables will still get unmerited subsidies. I think it means Australia and California will be able to swap CO2 permits.

I have a hunch the world will have 30% unemployment by 2030 due to population and pollution outstripping economic growth. Whether carbon taxation should be a key wealth transfer mechanism will be clearer as the time draws near.

(Deleted repetitious tirade.)MODERATOR
Peter – this entire thread has been about your opinion on the carbon tax. Please allow others to (mildly) state their opinion without constantly and repetitiously re-iterating yours.

Thank you for your mild reproof, regarding my posting about the Telegraph article written by Mr Chris Huhne, but I would have thought it fairly obvious why I consider Mr Huhne detached from reality. The article above talks about electricity prices in France being less costly than in the UK, completely ignoring the fact that this is due to nuclear energy, not wind and solar.
Says Mr Huhne:
“Some countries already have a head start. Electricity prices in France are set to rise by just 3 per cent this year. Compare and contrast with Britain, where prices are rising by three times as much. It is no surprise that France is the European country with the least reliance on fossil fuels, and enjoys some of the lowest prices – 9.4 per cent below ours”.

I have just read in the Financial Times that Francois Hollande, the French Socialist Presidential candidate, has in mind to reduce nuclear to less than 60% of France’s energy supply should he win power.
It seems to me that Europe has some kind of death wish regarding its economy.MODERATOR
Thank you for the extra analysis of your link.

This is another of Ziggy’s high-level, strategic-thinking articles. And it supports what I’ve been saying consistently.

• Energy is essential for improving human welfare
• Therefore, we need cheap energy not expensive energy
• It is the developing world that is most important for cutting emissions over the next half century or so
• Therefore, the developing world needs cheap, clean energy; they will build many fossil fuel plants if they are the cheapest;
• If we want the developing world to cut emissions, they need cheap clean energy technologies
• The developed world need to develop the technologies to provide cheap energy
• Therefore, raising the cost of fossil fuel energy in the developed world – with CO2 tax and ETS, will not reduce the cost of clean energy so it will not cut global emissions.

(Points above are simplified to get the main point across).

EDIT: BNC does not encourage block quoting, but I will offer a tip. Try entering the exact title of the article behind the paywall into a search engine, and then click on the link that appears. Magic happens.

Let me try a different tack. Bjorn Lomborg has a very interesting opinion piece in the Australian entitled “Carbon tax a costly feel-good gesture that won’t reduce emissions”. He argues that something like a $7 carbon tax, or less than 2c per litre of petrol, is justified, but a price above that is counterproductive. The main focus of countries, he goes on to say, should be to spend .2% of GDP ($100b globally) on R&D to bring down the price of green energy.

I think you will find a lot you agree with here; and there is much I like, too. So maybe we could use this to find common ground on an acceptable approach.

Now, I’m not going to discuss Australia’s carbon tax directly for a while, because for now it’s a moot point, because it’s a very contentious issue, and because Barry Brook wants us to stop the trench warfare.

So in the near future I hope to put up a proposal for what the US should do, based largely on Lomborg’s suggestions.

Huon, that is an excellent link. What a refreshing change to read some commonsense on the issue instead of the spin coming from the Government about so called “renewables” being the answer, and the CO2 tax being used to (partly) subsidise them. Just imagine the advantages of Gen IV nuclear: energy independence from the unstable Middle Eastern regimes, energy security in that we would have access to energy all the time as we do now, and reasonably priced energy as well. Why our politicians (for the most part- Dennis Jensen is an exception) can’t see this, I have no idea.

Well, the core proposal derived from Mr. Lomborg’s work is fairly straightforward: a $7 carbon tax with much of the revenue used to fund green energy RD&D. Renewables and nuclear would receive equal funding.

That’s the core. If one adds on the necessary political adjustments, the result is still pretty simple: a $12 tax with the revenue used to fund, in equal measure, offsets for the poor and middle class; cuts in taxes on capital; and green RD&D.

For the US, if my back-of-the-envelope calculations are correct, RD&D would be boosted by some $20 billion a year, or over .1% of our GDP, and nuclear would get at least $7 billion of that. IFR’s, LFTR’s, SMR’s, here we come.

I don’t understand Lomborg’s implied logic of promoting more R&D before we do anything – it reminds me a lot of Arthur Dent’s arguments in this debate with Professor Brook and others.

We don’t need more R&D to start phasing out fossil fuel generation – there are numerous Gen III/III+ reactor designs ready to be deployed now at a reasonable cost. It’s not a technological problem, it’s socio-political.

Of course, we need more RD&D of advanced reactor designs too (e.g. IFR, LFTR technology) for the long term.

Additionally, how do we know that any electricity generating technology will ever end up being cheaper than coal in places like Australia, while it is abundant and external costs aren’t included? We could potentially be R&Ding forever and not get there.

Of course, Lomborg is right that if we use taxes from GHG emissions to pick and fund energy winners (i.e. losers [unreliables]) we will achieve nothing.

The German Council of Economic Experts just released their Annual Report, and in the one chapter available in English, they put the research emphasis a little differently than Lomborg, so it might help explain his comments.
The Council is critical of existing feed-in tariffs (suggesting the immediate replacement of them with ‘green electricity certificates), argues the goal of procuring supply should be done based on price, and the goal of ‘finding new technological solutions can be left to an autonomous technology policy.’
(pg 16 of http://www.sachverstaendigenrat-wirtschaft.de/fileadmin/dateiablage/Sonstiges/chapter_one_2011.pdf)

In terms of promoting more R&D, and this thread, I’d illustrate the question isn’t simply of finding the lowest emitting source now – the argument could be that ‘green electricity certificates’ apply to all technologies based on a carbon-emissions threshold, as energy policy, while the pursuit of storage, or closing the fuel cycle (for nuclear), be funded as research in a separated technology policy.
The argument might be more impactful on those of us trapped in feed-in tariff jurisdictions, where the concept is paying a lot of money for the stuff that really excites you will somehow create a competitive industry.

Thanks for the link to the debate; I watched the 8 minute version and enjoyed it.

The proposal outlined above would help immediately in a couple of ways. First, it would raise the price of all fossil fuels. A $10 carbon tax ($10 per tonne of CO2) would, for example, raise the price of coal-fired electricity by about 1 cent per kWh.

Second, green RD&D funds could be used to subsidize first-of-a-kind Gen III nuclear plants, which are ready to go now, and small modular reactors, which will be available in a few years.

Now let’s suppose a further refinement of the plan: The carbon price rises to $4 the first year, $8 the second (near Lomborg’s suggested price) then rises more slowly, by just $2 per year.

So fossil fuels are gradually but continually becoming more expensive, while nuclear and solar, especially spurred by green funds, are continually becoming less expensive. You can see where this this is going to end up. And more importantly, so can utility executives who today want to put up a power plan that may last half a century.

More and more authoritative groups are recognising that the CO2 tax and ETS is bad policy. It will do nothing fore the environment but damage our economy. This just in on the effects of the EU ETS:

Europe’s 287 billion carbon ‘waste’

SWISS banking giant UBS says the European Union’s emissions trading scheme has cost the continent’s consumers $287 billion for “almost zero impact” on cutting carbon emissions, and has warned that the EU’s carbon pricing market is on the verge of a crash next year.

Describing the EU’s ETS as having “limited benefits and embarrassing consequences”, the report said there was fading political support for the scheme, the price was too low to have any significant environmental impact and it had provided windfall profits to market participants, paid for by electricity customers.

The report’s criticism of the EU’s ETS follows Barack Obama’s confirmation last week that the US would not have a cap-and-trade scheme and Canada’s refusal to implement an ETS.

PL my rejoinder (while it lasts) is that the EU shows how not to do an ETS, specifically by
1) issuing permits for free not selling them
2) allowing offsets of little or no merit.

Once a CO2 cap has been set at a non-trivial but achievable cut below current emissions every tonne of that CO2 must need a permit. Ideally they would be auctioned (this is called a divisible goods auction in game theory) but they could be sold for a fixed price. If free permits are issued up to a lax CO2 total there will be no emissions reduction.

Additionally in some EU countries (up to 50% by policy in the Netherlands) emissions are also excused by credits. The EU disallows carbon sinks such as tree planting but ironically they might actually work to some extent if the trees live long and fall down in the forest. What the EU approves is Clean Development Mechanism (CDM) offfsets which have proven to be a magic pudding.

CDM brings together the needy and the greedy and seems to be an artefact of Western affluence guilt. If a less developed country can persuade the authorities they emitted less than they felt they were entitled to they get a credit which can be sold to a developed country. Bizarrely that might even be a net increase in CO2 equivalent terms; example flaring methane so the CO2 counts not CH4. If the rule was that worldwide net emissions must decrease there would be no credits to sell.

The most likely climate sensitivity of 2.3 C (1.7 to 2.6 C) to CO2 doubling means we would not increase CO2 concentrations high enough to lock in a 2 C increase until the second half of this century under Business as Usual projections. Importantly, Schmittner says in the press release that climate sensitivity cannot be higher than 3 C. That’s a big change from climate sensitivity of up to 11 C which some Alarmists have been saying.

Therefore, we have more time to get our policies right. I’d suggest they are (for a start):

1. Do not implement economically damaging polices like CO2 tax and ETS. Damaging our economies will make us less able to take the best actions. We need to maximise wealth not destroy it.

2. Start with a fresh sheet of paper for regulation of Gen IV NPPs. The principal objective must be least cost, and small units (suitable for small and undeveloped economies).

3. ‘Direct Action’ policies to remove the impediments to low-cost Gen III (or Gen II if it is cheaper) in Australia.

Given that we’ve had almost unprecedented severe weather events with just 0.8C warming 3C seems unthinkable. It has major consequences for food security and demographics. There will be food crises and large populations will be unable to stay in certain regions. Compounding the climate problem fossil fuels will be in severe decline by the second half of the century and there is little sign that the market will find adequate replacements on its own. Therefore it seems stupid to keep burning oil, gas, coal and tar sands when they could be used sparingly. Since CO2 is cumulative we’ll end up with a worst-of-both-worlds problem with simultaneous energy shortages and a difficult climate.

While the world as a whole is fairly affluent we should make some sacrifice to lessen problems in the future. If we simply fritter away the cheap energy we enjoy now that bequeaths a poor legacy to today’s children. If we take some pain now there will be less pain later even within our lifetimes. Even if it all goes bad (which I fear may happen regardless) we can at least say we made an effort.

PL, the lower sensitivity value in the Schmittner et al paper hinges on a model reconstructed LGM temperature of 2.6C below pre-industrial values, rather than the more widely accepted 4-6C. If this is correct, then the magnitude of impacts of climate change per degree of temperature change will also be higher.

For instance, 2.6C of warming rather than 5C of warming leads to a sea level rise of 120m, which gives a rate of 46m per degree rather than 24m per degree. So if we got 3C warming under the old model at 550 ppm CO2, we might expect 72m of equilibrium sea level rise. By contrast, with the new results we expect 2.3C for 550 ppm, resulting in 106m of SLR.

Can anyone please refer me to a link where the estimated compliance cost of the CO2 tax and ETS is documented. [don’t point me to the Treasury, DRET or DCCEE, as they have not done these estimates).

What would be the compliance cost for the ETS once it is fully implemented and running at the level of financial security from fraud that will be expected? For example, what will be the annual cost for:

– Public servants in DCCEE, Treasury, ATO, Australian Federal Police, state police forces, state bureaucracies, Attorneys’ General Departments, Federal Department of Resources, Energy and Tourism, ABARE, BREE, the equivalent state departments of energy, resources, agriculture, forestry, environment, Prime Minister and Cabinet, State departments of Premier and Cabinet, the law courts, High Court, goals, any others I haven’t thought of?

– The businesses that have to report their emissions – what is the cost to implement and maintain the monitoring equipment and to report.? What is the cost to update and replace equipment, reporting systems and legacy data each time the rules change (as they do every few years)?

– Farmers and all the upstream and downstream industries (farming will be included eventually if the tax and ETS remain)

– Accountants, lawyers, accounting firms, law firms, courts?

– Firms that use the data, analyse it and report? What is the cost for them to have to maintain and continually update their systems and legacy data?

– I haven’t even started to ask questions about the compliance cost for purchasing overseas carbon credits

The EPA recently stated in a court submission that the cost to the EPA alone to manage the existing regulations would be $23 billion per year. That is not a typo. They estimated they would have to increase their permanent staff numbers from 17,000 to 250,000 permanent employees. (It is clear from this why the unions want a carbon tax and ETS – it means lots more public servants and hence lots more union dues). The cost to business could be expected to be at least ten times this cost, and the other departments who have a role to play would at least double the EPA cost.

We should also ask what is the likely benefit to be gained from this expenditure?

1. By how much will the CO2 tax and ETS reduce global emissions?

2. By how much will the CO2 tax and ETS change the climate?

3. What effect will the CO2 tax and ETS have on the ecology of the Great Barrier Reef and Kakadu National Park?

Peter a quick answer to some of those questions is that if only 500 or enterprises pay most of the carbon tax then the compliance cost should not run to more than a few million dollars per year. The question of monitoring and deception is harder. We know from TV wrestling that referees often choose not to see things. Will defaulters be shut down or have their execs thrown in jail? It’s hard to see how all this will be ready by July despite the former CPRS supposedly starting in 2009.

Clearly, if implemented, it wouldn’t stay at 500 enterprises. Eventuall virtually everyone would have to be involved if we are goig to trade in CO2-eq. Its so obvious I am surprised you even bring it up.

More evidence the Australian metals industry is in a death spiral with the sidelining of a manganese alloy plant, in this case a BHP-B subsidiary that presumably gets the same cheap electricity rates as Tasmanian zinc and aluminium smelters. Is it a coincidence it comes weeks before the introduction of carbon tax?

They blame the high $A but it wouldn’t be so high if we didn’t export $55bn worth of coal. It’s a bit rich to blame carbon tax since for the next year at least smelters will be exempted from 94.5% of carbon tax. However I believe big business secretly plans to offshore most of the metals industries to countries like China and India whose carbon penalties seem trifling at best for the foreseeable future. This is the killer; not only could they be using Australian ores but they could be using Australian coal, either thermal or coking, then selling it back to us as embodied energy.

I believe the best approach is the carbon tariff on imported metals if produced with carbon intensive methods. No free ride on our carbon restraint. The carbon tax exemption approach clearly doesn’t do anything to stop this. However I believe it likely that Canberra will not only persevere with this wrong approach (exemptions) but will make further cuts such as reducing the tax from $23. The whole exercise could become pointless.

Let me check if I understand you correctly. Is this what you are arguing? That even though a CO2 tax and ETS will have no effect on global emissions, no effect on the climate, no effect on sea levels, no effect on Kakadu or the Great Barrier Reef, but will damage our economy (and therefore human well being) and will force manufacturing industries to move out of Australia (and take the employment with them), will reduce Australia’s productivity, despite all this you still advocate Australia impose a CO2 tax and ETS. Why would that be?

Is this an example of being objective?

John Newlands, @ 23 February 2012 at 8:55 PMyou say:

However I believe big business secretly plans to offshore most of the metals industries to countries like China and India whose carbon penalties seem trifling at best for the foreseeable future. This is the killer; not only could they be using Australian ores but they could be using Australian coal, either thermal or coking, then selling it back to us as embodied energy.

There is nothing secret about it. The western democracies – like USA, UK, Canada European countries and Australia have been adding more and more regulations and taxes on business. This makes them less competitive than the Asian countries for manufacturing and some other businesses. Despite other advantages of the western democracies – such as better governance – there still becomes a time when business finds they cannot remain competitive in an international market unless they move their business to a country with cheaper costs of production (less tax, less regulatory burden, cheaper energy, less risk of industrial action to disrupt production and therefore less risk of massive costs from breach of contracts to deliver their products to customers, etc. the CO2 tax and ETS, (which will grow in price, will expand in its reach and whose compliance costs will increase enormously (as I pointed out in my previous comment) make life more difficult for business in Australia compared with its competitors.

John, I would seriously urge you and others to attempt to answer the questions in my comment @ 22 February 2012 at 10:07 AM honestly and quantitatively. These are not intended to be rhetorical questions. The reason I ask them is because, I am sure, if you did honestly attempt to answer them, you would understand why people are so strongly opposed to the CO2 tax and ETS. Those who are opposed are not ignorant. They realise the consequences – the human consequences – and they also realise that these imposts will not do anything to the climate at all.

One of the reasons you and others gave for Australia imposing a CO2 tax and ETS was that Australia could lead the world by example. The vast majority of people knew that this was complete and utter nonsense. And the conferences at Copenhagen, Cancun and Durban have demonstrated that unequivocally for everyone to see. If you had followed international negotiations, such as the general Agreement on Tariffs and Trade, over 50 odd years you would realise that international agreements are not achieved by giving away a negotiating position before you start negotiating.

The CO2 tax and ETS will seriously damage our economy for no gain. Please focus on the n gain’ part first. They CO2 tax will not change the climate, sea levels, or the ecology of the Great Barrier Reef.

Peter the voting analogy is to show that a snowball effect can and does eventually make a large difference. If CO2 is a problem (which I say it is) then whose problem is it? For starters I’d nominate a country which is the OECD’s largest per capita emitter, is the world’s biggest coal exporter (and growing) and is ravaged by droughts, fires and floods.

I think imposed carbon pricing is a step in the right direction it’s just they’ve got the mechanics wrong in my opinion. Could they have foreseen the metals industry exodus? Deep down they must know exporting $55bn a year in coal really means exporting emissions and jobs. Along with the naive belief in renewables I suggest they haven’t thought it through properly.

Sorry for not explaining properly. Often I tend to write for just the person I’ve been conversing with previously on this subject, and forget to explain my comments well enough for the boarder audience.

However, in short, the carbon tax and ETS would tax and trade emissions on the basis of the emissions produce by producers of CO2 emissions in Australia (or anywhere in the world). The problem is that that approach is grossly unfair. The reason it is unfair is that countries like in Europe have forced their manufacturing industries to move to Asia so Europe’s emissions appear lower. But then Europe imports the products that have been manufactured in Asia. The Asian countries get blamed for the CO2 emissions for the products that the Europeans then consume. So the Europeans are not blamed, or taxed, for the emissions they cause (by buying products with embodied CO2 emissions).

It does go near an ethical consideration though; we are paid for those items. Australia earns money by emitting carbon and then selling the product. So who is liable for the emissions?

Making the purchaser solely responsible seems harsh; they have no control over how intensely emissions are produced for the item, but make them responsible for them anyway? The purchaser does not have “operational control”, which is the criterion for responsibility under NGERs emissions law in Australia.

Conversely, this seems to suggest that responsibility for the emissions lies with whom ever sells the emitting product; this seems to suggest we are responsible for our coal emissions then doesn’t it?

I don’t see it possible to have this both ways. Either we are responsible for the emissions of products we sell and then we get our coal emissions; or the purchaser is responsible for something they can not control.

This is not the first time I have been in furious disagreement with Alan Moran of the glorious IPA.

I don’t think you should blame Alan Moran and IPA for explaining the issue. The issue has been around for a very long time and discussed by economists for ages.

While a consumption based emissions price is clearly near infinitely preferable to a production based one, it is virtually impossible to implement given the systems we have in place.

But the point I was making is that it is absolutely wrong to say Australia is the largest per capita emitter of CO2 if you probably account for embodied emissions per capita.

I don’t think this statement is correct:

It does go near an ethical consideration though; we are paid for those items. Australia earns money by emitting carbon and then selling the product. So who is liable for the emissions?

Making the purchaser solely responsible seems harsh; they have no control over how intensely emissions are produced for the item, but make them responsible for them anyway? The purchaser does not have “operational control”, which is the criterion for responsibility under NGERs emissions law in Australia.

The end user should be liable for the emissions. It is the purchasers decisions that buy the products that contain more or less emissions. If there is a price on emissions, it should apply to the emissions embodied in the end product. In that case it would work like the GST, VAT, consumption taxes. It penalises the products with the highest content of the evil emissions. If applied across all emissions of evil it would penalise the products with the highest content of evil emissions the most.

But, I recognise this is hypothetical because it would have to be implemented world wide and it is not going to happen in the foreseeable future.

As I said up thread there is a much better way. Remove the impediments that prevent the safest and cleanest low emission electricity generation from being a low cost alternative. That could be done without a CO2 tax or ETS. It would also have many other benefits as well, as explained up thread.

Peter I’d like the IPA to doctor the figures a bit more so Australia is in the bottom ten not the top ten.

There plenty of cases where the seller of a harmful product is liable. Selling alcohol to minors, selling narcotics, ammonium nitrate and no doubt asbestos. From a simple compliance perspective it is easier to nab the top of the pyramid than the bottom layers. Recall on other matters GW Bush said ‘you’re either with us or against us’. My question to China is ‘are you serious about reducing emissions?’ That’s all good about new nuclear etc in China but it seems based on their unequivocal response to the EU airline tax this must be some time in the future.

They’ll get the coal somewhere else someone will say. Good luck finding a country with 9 coal loading ports in the Pacific region though I see the US has joined the rush.

I therefore think we should ask China to pay carbon tax on Australian coal on a voluntary basis, with the revenue to be paid into an approved green fund. In 2015 they can come under a CO2 cap. Clive Palmer’s new ‘China First’ coal mine could be renamed ‘Earth First’ with lumps of coal reburied in a simple ceremony.

To some this may all sound a bit silly. It’s no more silly than selling China all the fossil carbon they want when we have to cut back.

Prof Brook has stated that he is apolitical and the blog does not support any particular political ideology.

After a discussion on the subject, Professor Brook has asked me to inform BNC commenters that blatant political tirades(of any persuasion) and attempts to rally support for any political party will not be tolerated.

When presenting facts, please frame them in a politically non-partisan manner. Obviously the odd, off-the-cuff political comment is permissible.

He also asked me to convey that any moderator decision has his full support and to request that commenters desist from appealing any such decision.

The Australian Industry Group (AIG) and Business Council of Australia (BCA) ― two crucial supporters of Labor’s carbon tax ― have called on the federal government to cut the starting price from $23 per tonne of carbon emissions to a level closer to Europe’s $10 a tonne price, according to a report by The Australian.
The business groups warned that the $23 pricing level was excessive, and amounted to a tax on industry specifically, rather than on carbon emitters in general, while saying that the planned pricing will weigh on competitiveness.

Of course, we still have no estimate of what the compliance cost of complying with carbon pricing will be and how it will grow over time. The best we have is what is being revealed in the court case against the US EPA. $21 billion per year, 230,000 extra full times staff required in the EPA alone, and 10 year for EPA processing of all applications for new carbon emitting businesses. That is the estimate to implement the existing US laws.

The benefit/cost ratio for the Australian CO2 tax and ETS is near zero given that we are in effect acting alone. But the cost is very high.

“What is the ratio of benefit to cost of the Australian CO2 tax and ETS from 2012 until 2050? Is it true that the benefits are near zero and the cost (in lost GDP) would be about $1,350 billion? Is it true that these facts are known to the world’s leading authorities and have been known for years? If so, why is the government apparently not aware of these facts?”

Rough calculations indicate the benefit/cost is 0.03 using the damages from the Nordhause Yale-RICE (2010) model and the cost of the ETS from Professor Henry Ergas.

Henry Ergas applied Garnaut’s discount rate to Treasury’s estimate of the loss of GDP that would be caused by the government’s Clean Energy Future legislation. The cumulative loss of GDP to 2050 is $1,350 billion.

The damages due to AGW, according to the default values set in RICE, scaled to Australia’s share on the basis of Australia’s share of world GDP, is $41 billion

I doubt it is valid to use bits of the Treasury model and bits of the Nordhaus model when it suits. Claims of $1,350 bn in costs need to be analysed. When Ergas uses phrases like ‘an insult to common sense’ his objectivity comes into question.

I agree that Treasury assumptions are unrealistic. I also agree we are making several of the carbon pricing mistakes pointed out by Nordhaus. The answer is to fix those mistakes.

Your comment is dismissive but without substance. You need to do better than that.

The message is clear, even if the figures are not exact (which I acknowledged in the comment).

What this rough analysis demonstrates (for those who have not yet accepted it) is that carbon pricing is the wrong approach, at least until the world agrees to a mechanism – and that is clearly a very long way off. It may never happen.

I believe Ziggy Switkowski’s letter is behind a paywall, so I’ll post an extract from it:

There are real costs to climate action in higher energy prices, handicapped industries, displaced workers and loss of competitiveness, but with no measurable improvement in our environment. Evidently, we’ve decided to take an economic hit for the global good. But even far-sighted and fair-minded voters struggle to balance today’s cost of living pressures against tomorrow’s ambiguous benefits.